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Empirical Evidence on the Motives for Bank Mergers

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Author Info

  • Dean F. Amel

    (Federal Reserve Board)

  • Stephen A. Rhoades

    (Federal Reserve Board)

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    Abstract

    Determinants of bank mergers are analyzed to get an indication of the motives for mergers. The analysis is based on 1,724 bank mergers and acquisitions from 1978 to 1983 using multinomial logit analysis for testing purposes. Market share of the target and per capita income stand out as attractive to acquiring firms, but growth and profits do not. Overall, the findings in this study do not point to any single motive for bank acquisitions. This is consistent with findings for the industrial sector and most other findings for banking.

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    File URL: http://college.holycross.edu/RePEc/eej/Archive/Volume15/V15N1P17_27.pdf
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    Bibliographic Info

    Article provided by Eastern Economic Association in its journal Eastern Economic Journal.

    Volume (Year): 15 (1989)
    Issue (Month): 1 (Jan-Mar)
    Pages: 17-27

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    Handle: RePEc:eej:eeconj:v:15:y:1989:i:1:p:17-27

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    Postal: c/o Dr. Alexandre Olbrecht, The Anisfield School of Business 205, Ramapo College, 505 Ramapo Valley Road, Ramapo, New Jersey 07430, USA
    Phone: (201) 684-7346
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    Web page: http://www.ramapo.edu/eea/journal.html
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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
    2. Utton, M A, 1972. "Mergers and the Growth of Large Firms," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 34(2), pages 189-97, May.
    3. Samuel H. Talley, 1974. "The impact of holding company acquisitions on aggregate concentration in banking," Staff Studies 80, Board of Governors of the Federal Reserve System (U.S.).
    4. Hannan, Timothy H & Rhoades, Stephen A, 1987. "Acquisition Targets and Motives: The Case of the Banking Industry," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 67-74, February.
    5. Jesse W. Markham, 1955. "Survey of the Evidence and Findings on Mergers," NBER Chapters, in: Business Concentration and Price Policy, pages 141-212 National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:
    1. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003. "The effects of mergers: an international comparison," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 625-653, May.
    2. Ely, David P. & Song, Moon H., 2000. "Acquisition activity of large depository institutions in the 1990s:: An empirical analysis of motives," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(4), pages 467-484.
    3. Andrés Felipe García Suaza & José Eduardo Gómez Gónzalez, 2009. "Determinantes de las fusiones y adquisiciones en el sistema financiero colombiano. 1990-2007," BORRADORES DE ECONOMIA 005294, BANCO DE LA REPÚBLICA.
    4. John Goddard & Donal McKillop & John Wilson, 2009. "Which Credit Unions are Acquired?," Journal of Financial Services Research, Springer, vol. 36(2), pages 231-252, December.
    5. Anthony M. Santomero & David L. Eckles, 2000. "The determinants of success in the new financial services environment: now that firms can do everything, what should they do and why should regulators care?," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 11-23.
    6. Went, Peter, 2003. "A quantitative analysis of qualitative arguments in a bank merger," International Review of Financial Analysis, Elsevier, vol. 12(4), pages 379-403.
    7. Carow, Kenneth A. & Lee, Winson B., 1997. "State passage of interstate banking legislation: An analysis of firm, legislative, and economic characteristics," Journal of Banking & Finance, Elsevier, vol. 21(7), pages 1017-1043, July.
    8. Ignacio Hernando & María J. Nieto & Larry Wall, 2008. "Determinants of domestic and cross-border bank acquisitions in the European Union," Banco de España Working Papers 0823, Banco de España.
    9. Ghosh, Chinmoy & Harding, John & Phani, B.V., 2008. "Does liberalization reduce agency costs? Evidence from the Indian banking sector," Journal of Banking & Finance, Elsevier, vol. 32(3), pages 405-419, March.
    10. Jose Eduardo Gómez-González & Juan carlos Mendoza, . "Failing and Merging as Competing Alternatives during Times of Financial Distress: Evidence from the Colombian Financial Crisis," Borradores de Economia 588, Banco de la Republica de Colombia.
    11. David C. Wheelock & Paul W. Wilson, 2000. "Why do Banks Disappear? The Determinants of U.S. Bank Failures and Acquisitions," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 127-138, February.
    12. Carow, Kenneth A. & Heron, Randall A., 1998. "The interstate banking and branching efficiency act of 1994: A wealth event for acquisition targets," Journal of Banking & Finance, Elsevier, vol. 22(2), pages 175-196, February.
    13. Timothy H. Hannan & Steven J. Pilloff, 2009. "Acquisition Targets and Motives in the Banking Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(6), pages 1167-1187, 09.
    14. Timothy H. Hannan & Steven J. Pilloff, 2004. "Will the proposed application of Basel II in the United States encourage increased bank merger activity? evidence from past merger activity," Finance and Economics Discussion Series 2004-13, Board of Governors of the Federal Reserve System (U.S.).
    15. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "Effekte von Fusionen in Kontinentaleuropa und Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(2), pages 204-213.

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