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The competing risks of acquiring and being acquired: Evidence from Colombia's financial sector

  • García-Suaza, Andrés Felipe
  • Gómez-González, José E.

This paper studies the determinants of the probability of participating in a process of merging or acquisition for financial institutions in Colombia. We use survival analysis techniques and competing risks models to estimate the probability of participating in such processes as an acquiring or acquired firm. Using an especially rich database containing financial information of Colombian banks for the period 1990-2007, we find that both macroeconomic and microeconomic variables are important determinants of this probability. However, there are differential effects for the acquiring firm and the acquired firm. Particularly, while firm size and solvency are significant determinants of the probability of being an acquiring firm, efficiency is an important determinant of the probability of being acquired. Also, the concentration index, which plays no role for acquiring firms, plays an important role in the probability of being acquired.

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Article provided by Elsevier in its journal Economic Systems.

Volume (Year): 34 (2010)
Issue (Month): 4 (December)
Pages: 437-449

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Handle: RePEc:eee:ecosys:v:34:y:2010:i:4:p:437-449
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  1. Andrés Garcia & José Gomez, 2009. "Determinantes de las fusiones y adquisiciones en el sistema financiero colombiano. 1990-2007," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  2. M. Meschi, 1997. "Analytical Perspectives on Mergers and Acquisitions: A Survey," CIBS Research Papers in International Business 5-97, London South Bank University CIBS.
  3. Carree, Martin A., 2003. "A hazard rate analysis of Russian commercial banks in the period 1994-1997," Economic Systems, Elsevier, vol. 27(3), pages 255-269, September.
  4. Gomez-Gonzalez, Jose E. & Kiefer, Nicholas M., 2006. "Bank Failure: Evidence from the Colombia Financial Crisis," Working Papers 06-12, Cornell University, Center for Analytic Economics.
  5. Diaz, Belen Diaz & Olalla, Myriam Garcia & Azofra, Sergio Sanfilippo, 2004. "Bank acquisitions and performance: evidence from a panel of European credit entities," Journal of Economics and Business, Elsevier, vol. 56(5), pages 377-404.
  6. Hannan, Timothy H & Rhoades, Stephen A, 1987. "Acquisition Targets and Motives: The Case of the Banking Industry," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 67-74, February.
  7. repec:dgr:uvatin:20010088 is not listed on IDEAS
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