Are bank mergers procyclical or countercyclical? Theory and evidence from Taiwan
AbstractThis work develops a theory of countercyclical bank mergers and finds supported empirical evidence in Taiwan. Procyclical (countercyclical) mergers tend to involve higher (lower) measures of merger activities during economic booms than downturns. Several previous studies suggest that bank mergers are procyclical in developed countries, possibly driven by the higher capital liquidity that accompanies an economic expansion. Alternatively, this work emphasizes the role of economic situation and the government in bank mergers. Our results suggest that the depressed industrial situation, which leads to severe competitive market and impoverished revenue basis, drives banks to increase their market share for reducing competition through merger with the merger cost as low as possible by utilizing government's offering and the beneficial condition of stock market. Merger activities may be explained by the motivation of generating higher profit and able to survive, whereas the banks with insufficient competitiveness are more likely to suffer serious loss and thus forced to be merged.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Financial Economics.
Volume (Year): 23 (2013)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.tandfonline.com/RAFE20
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.