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The Use Of Acquisitions And Joint Ventures By U.S. Banks Expanding Abroad

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  • Kimberly C. Gleason
  • Ike Mathur
  • Roy A. Wiggins

Abstract

We examine international bank expansions, which are classified as banking (scale related) or nonbanking (complementary) moves into developed or developing markets. The market responds favorably to expansions through joint ventures by U.S. banks, and insignificantly to expansions through acquisitions. Accounting and operating performances (for joint venture banks) and long-period holding returns (for acquisitions) show improvement in the two years following the announcement. Systematic risk declines for the sample overall, for acquisitions, and for expansions into developing countries. In general, scale or developing expansions are better pursued through acquisitions, whereas complementary or developed expansions are best pursued through joint ventures. 2006 The Southern Finance Association and the Southwestern Finance Association.

Suggested Citation

  • Kimberly C. Gleason & Ike Mathur & Roy A. Wiggins, 2006. "The Use Of Acquisitions And Joint Ventures By U.S. Banks Expanding Abroad," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(4), pages 503-522.
  • Handle: RePEc:bla:jfnres:v:29:y:2006:i:4:p:503-522
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    References listed on IDEAS

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    1. Klaus Gugler & Ralph Siebert, 2007. "Market Power versus Efficiency Effects of Mergers and Research Joint Ventures: Evidence from the Semiconductor Industry," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 645-659, November.
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    Cited by:

    1. Amici, Alessandra & Fiordelisi, Franco & Masala, Francesco & Ricci, Ornella & Sist, Federica, 2013. "Value creation in banking through strategic alliances and joint ventures," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1386-1396.
    2. repec:spr:manint:v:49:y:2009:i:3:d:10.1007_s11575-009-0143-z is not listed on IDEAS
    3. Berger, Allen N. & El Ghoul, Sadok & Guedhami , Omrane & Roman, Raluca, 2015. "Internationalization and bank risk," Research Working Paper RWP 15-8, Federal Reserve Bank of Kansas City.
    4. Fiordelisi, Franco & Soana, Maria-Gaia & Schwizer, Paola, 2013. "The determinants of reputational risk in the banking sector," Journal of Banking & Finance, Elsevier, vol. 37(5), pages 1359-1371.
    5. repec:eee:jbrese:v:80:y:2017:i:c:p:35-44 is not listed on IDEAS
    6. Gleason, Kimberly C. & Wiggenhorn, Joan, 2007. "Born globals, the choice of globalization strategy, and the market's perception of performance," Journal of World Business, Elsevier, vol. 42(3), pages 322-335, September.

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