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Cross-border bank acquisitions: Is there a performance effect?

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  • Ricardo Correa
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    Abstract

    This paper uses a unique database that includes deal and bank balance sheet information for 220 cross-border acquisitions between 1994 and 2003 to analyze the characteristics and performance effects of international takeovers on target banks. A discrete choice estimation shows that banks are more likely to get acquired in a cross-border deal if they are large, bad performers, in a small country, and when the banking sector is concentrated. Post-acquisition performance for target banks does not improve in the first two years relative to domestically-owned financial institutions. This result is explained by a decrease in the banks' net interest margin in developed countries and an increase in overhead costs in emerging economies.

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    Bibliographic Info

    Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 922.

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    Date of creation: 2008
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    Handle: RePEc:fip:fedgif:922

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    Keywords: Bank mergers ; Banks and banking; International;

    This paper has been announced in the following NEP Reports:

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    Cited by:
    1. Lehner, Maria, 2008. "Entry Mode Choice of Multinational Banks," Discussion Papers in Economics 8222, University of Munich, Department of Economics.
    2. Claessens, Stijn & van Horen, Neeltje, 2009. "Being a foreigner among domestic banks: Asset or liability?," MPRA Paper 13467, University Library of Munich, Germany.
    3. Ahmad Bello Dogarawa, 2011. "Chronology of banking reforms in Nigeria: A survey of past and present theoretical and empirical literature," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 19(4), pages 370-382, November.
    4. Lehner, Maria, 2009. "Entry mode choice of multinational banks," Journal of Banking & Finance, Elsevier, vol. 33(10), pages 1781-1792, October.

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