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The risk effects of bank acquisitions

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Abstract

An examination of the risk effects of bank acquisitions that occurred between the first quarter of 1984 and the last quarter of 1993. Its findings -- that banks are not using acquisitions to increase their risk exposure and that acquisitions increase profitability over time -- cast doubt on the importance of risk diversification as a motive for bank acquisitions.

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  • Ben R. Craig & João A. C. Santos, 1997. "The risk effects of bank acquisitions," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 25-35.
    • Handle: RePEc:fip:fedcer:y:1997:i:qii:p:25-35
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    References listed on IDEAS

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    Cited by:

    1. Austin, Rebekah E. & Dunham, Lee M., 2022. "Do FinTech acquisitions improve the operating performance or risk profiles of acquiring firms?," Journal of Economics and Business, Elsevier, vol. 121(C).
    2. Pierre-Guillaume Méon & Laurent Weill, 2003. "Can Mergers in Europe Help Banks Hedge Against Macroeconomic Risk," Working Papers of LaRGE Research Center 2003-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    3. Beck, Thorsten, 2008. "Bank competition and financial stability : friends or foes ?," Policy Research Working Paper Series 4656, The World Bank.
    4. Vallascas, Francesco & Hagendorff, Jens, 2011. "The impact of European bank mergers on bidder default risk," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 902-915, April.
    5. Hughes, Joseph P. & Lang, William W. & Mester, Loretta J. & Moon, Choon-Geol & Pagano, Michael S., 2003. "Do bankers sacrifice value to build empires? Managerial incentives, industry consolidation, and financial performance," Journal of Banking & Finance, Elsevier, vol. 27(3), pages 417-447, March.
    6. Tatiana Gaelle Yongoua Tchikanda, 2017. "Systemic risk and individual risk: A trade-off?," Working Papers hal-04141656, HAL.
    7. Fabio Di Vittorio & Delong Li & Hanlei Yun, 2018. "On Bank Consolidation in a Currency Union," IMF Working Papers 2018/092, International Monetary Fund.
    8. Calice, Pietro & Leonida, Leone & Muzzupappa, Eleonora, 2021. "Concentration-stability vs concentration-fragility. New cross-country evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 74(C).
    9. Carol Ann Northcott, 2004. "Competition in Banking: A Review of the Literature," Staff Working Papers 04-24, Bank of Canada.
    10. Hagendorff, Jens & Vallascas, Francesco, 2011. "CEO pay incentives and risk-taking: Evidence from bank acquisitions," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1078-1095, September.
    11. Pedro Barros & Diana Bonfim & Moshe Kim & Nuno Martins, 2014. "Counterfactual analysis of bank mergers," Empirical Economics, Springer, vol. 46(1), pages 361-391, February.
    12. Tatiana Gaelle Yongoua Tchikanda, 2017. "Systemic risk and individual risk: A trade-off?," EconomiX Working Papers 2017-16, University of Paris Nanterre, EconomiX.
    13. Diana Bonfim & Pedro Pita Barros & Moshe Kim & Nuno C. Martins, 2011. "Estimating the impact of bank mergers: an application to the Portuguese banking system," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    14. International Monetary Fund, 2004. "Bank Consolidation and Performance: The Argentine Experience," IMF Working Papers 2004/149, International Monetary Fund.
    15. Shih, Michael S. H., 2003. "An investigation into the use of mergers as a solution for the Asian banking sector crisis," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(1), pages 31-49.
    16. Haq, Mamiza & Heaney, Richard, 2009. "European bank equity risk: 1995-2006," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(2), pages 274-288, April.
    17. Bremus, Franziska M., 2015. "Cross-border banking, bank market structures and market power: Theory and cross-country evidence," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 242-259.
    18. Silva-Buston, Consuelo, 2019. "Systemic risk and competition revisited," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 188-205.
    19. Mr. Gianni De Nicolo & Ms. Mary G Zephirin & Philip F. Bartholomew & Ms. Jahanara Zaman, 2003. "Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk," IMF Working Papers 2003/158, International Monetary Fund.
    20. Rómulo Chumacero E. & Patricia S. Langoni, 2001. "Risk, Size and Concentration in the Chilean Banking System," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 4(1), pages 25-34, April.
    21. Yeager, Timothy J., 2004. "The demise of community banks? Local economic shocks are not to blame," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2135-2153, September.
    22. International Monetary Fund, 2007. "Italy—Assessing Competition and Efficiency in the Banking System," IMF Working Papers 2007/026, International Monetary Fund.
    23. William Emmons & R. Gilbert & Timothy Yeager, 2004. "Reducing the Risk at Small Community Banks: Is it Size or Geographic Diversification that Matters?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(2), pages 259-281, April.
    24. Timothy J. Yeager, 2002. "The demise of community banks? local economic shocks aren't to blame," Supervisory Policy Analysis Working Papers 2002-03, Federal Reserve Bank of St. Louis.
    25. Claudia M. Buch & Gayle L. DeLong & Katja Neugebauer, 2007. "International Banking and the Allocation of Risk," IAW Discussion Papers 32, Institut für Angewandte Wirtschaftsforschung (IAW).

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