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The risk effects of bank acquisitions

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Author Info
Ben Craig
João Cabral dos Santos

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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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File URL: http://www.clevelandfed.org/research/review/1997/97-q2-craig.pdf
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Publisher Info
Article provided by Federal Reserve Bank of Cleveland in its journal Economic Review.

Volume (Year): (1997)
Issue (Month): Q II ()
Pages: 25-35
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:fip:fedcer:y:1997:i:qii:p:25-35

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Related research
Keywords: Bank mergers ; Risk;

References listed on IDEAS
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.:

  1. Donald R. Fraser & James W. Kolari, 1987. "Determinants of small bank acquisition premiums," Proceedings, Federal Reserve Bank of Chicago, pages 393-405.
  2. Ben R. Craig & João Cabral dos Santos, 1996. "Performance and asset management effects of bank acquisitions," Working Paper 9619, Federal Reserve Bank of Cleveland. [Downloadable!]
  3. David R. Meinster & Rodney D. Johnson, 1979. "Bank Holding Company Diversification and the Risk of Capital Impairment," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 683-694, Autumn. [Downloadable!] (restricted)
  4. Boyd, John H. & Graham, Stanley L. & Hewitt, R. Shawn, 1993. "Bank holding company mergers with nonbank financial firms: Effects on the risk of failure," Journal of Banking & Finance, Elsevier, vol. 17(1), pages 43-63, February. [Downloadable!] (restricted)
  5. William C. Hunter & Larry D. Wall, 1989. "Bank merger motivations: a review of the evidence and an examination of key target bank characteristics," Economic Review, Federal Reserve Bank of Atlanta, issue Sep, pages 2-19.
  6. Jeffrey A. Clark, 1988. "Economies of scale and scope at depository financial institutions: a review of the literature," Economic Review, Federal Reserve Bank of Kansas City, issue Sep, pages 16-33. [Downloadable!]
  7. Berger, Allen N. & Hunter, William C. & Timme, Stephen G., 1993. "The efficiency of financial institutions: A review and preview of research past, present and future," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 221-249, April. [Downloadable!] (restricted)
  8. Benston, George J & Hunter, William C & Wall, Larry D, 1995. "Motivations for Bank Mergers and Acquisitions: Enhancing the Deposit Insurance Put Option versus Earnings Diversification," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 777-88, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. 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, vol. 25(2), pages 259-281, April. [Downloadable!] (restricted)
  2. Tetsuji Okazaki & Michiru Sawada, 2006. "Effects of a bank consolidation promotion policy: Evaluating Bank Law in 1927 Japan," CIRJE F-Series CIRJE-F-400, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  3. Pierre-Guillaume Méon & Laurent Weill, 2005. "Can Mergers in Europe Help Banks Hedge Against Macroeconomic Risk?," Working Papers DULBEA 05-08.RS, Université libre de Bruxelles, Department of Applied Economics (DULBEA). [Downloadable!]
    Other versions:
  4. Philip E. Strahan & Amir Sufi, 2001. "Expansion of bank powers: who gains the most?," Proceedings, Federal Reserve Bank of Chicago, issue May, pages 682-698.
  5. 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. [Downloadable!]
  6. Pablo Druck & Raul Susmel & Ritu Basu & David Marston, 2004. "Bank Consolidation and Performance: The Argentine Experience," IMF Working Papers 04/149, International Monetary Fund. [Downloadable!]
  7. Gianni De Nicoló & Philip F. Bartholomew & Jahanara Zaman & M. G. Zephirin, 2003. "Bank Consolidation, Internationalization and Conglomeration: Trends and Implications for Financial Risk," IMF Working Papers 03/158, International Monetary Fund. [Downloadable!]
  8. Beck, Thorsten, 2008. "Bank competition and financial stability : friends or foes ?," Policy Research Working Paper Series 4656, The World Bank. [Downloadable!]
  9. Joseph P. Hughes & William W. Lang & Loretta J. Mester & Choon-Geol Moon & Michael S. Pagano, 2002. "Do Bankers Sacrifice Value to Build Empires? Managerial Incentives, Industry Consolidation and Financial Performance," Center for Financial Institutions Working Papers 02-18, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
    Other versions:
  10. Andrea M. Maechler & Sandra Marcelino & Paulo Flavio Nacif Drummond, 2007. "Italy-Assessing Competition and Efficiency in the Banking System," IMF Working Papers 07/26, International Monetary Fund. [Downloadable!]
  11. Carol Ann Northcott, 2004. "Competition in Banking: A Review of the Literature," Working Papers 04-24, Bank of Canada. [Downloadable!]
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