The impact of mergers and acquisitions on the performance of Greek Banking Sector
AbstractThe Greek banking landscape has experienced substantial changes and restructuring since the mid 1990s. This paper examines the financial performance and the implications of Greek banks’ mergers and acquisitions that took place during the period 1996-2009. With the use of event study methodology, we reject the “semi-strong form” of Efficient Market Hypothesis (EMH) of the Athens Stock Exchange, possibly reflecting leakage of information. We find that ten days prior to the announcement of a merger and acquisition, shareholders receive considerable and significant positive cumulative average abnormal returns (CAARs), which are more significant in the case of cash deals compared to stock deals. Also the results show that significant positive CAARs are gained upon the announcement of horizontal and diversifying bank deals. The overall results (the weighted average of gains to the bidder and to the target bank) indicate that bank mergers and acquisitions have no impact and do not create wealth. We also examine operating performance by estimating twenty financial ratios. Findings show that operating performance does not improve, following mergers and acquisitions. There are also controversial results when comparing merged to non-merged banks. index.
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Bibliographic InfoPaper provided by University of Peloponnese, Department of Economics in its series Working Papers with number 0051.
Length: 24 pages
Date of creation: 2010
Date of revision:
Banks; M&As; Event Study; Operating Performance;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-11 (All new papers)
- NEP-BAN-2010-06-11 (Banking)
- NEP-COM-2010-06-11 (Industrial Competition)
- NEP-EFF-2010-06-11 (Efficiency & Productivity)
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- George Mountis, 2012. "Banks’ Domestic & Cross-border M&As: Where Can They Go Wrong?," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 6(1), pages 39-67, June.
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