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What drives cross-border M&As in commercial banking?

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  • Gulamhussen, Mohamed Azzim
  • Hennart, Jean-François
  • Pinheiro, Carlos Manuel

Abstract

Using a gravity model, we analyze the determinants of the probability that commercial banks in 89 acquiring countries and 118 target countries will undertake M&As over a 30-year period (1981–2010) and of the value of these M&As. We find that the value of cross-border M&As increases with the size of the acquiring country, and that both the probability and value of M&As vary positively with the depth of the financial market in acquirer countries and the presence of corporate and non-corporate customers from acquiring countries in target countries, and negatively with the geographic, psychic, and time zone distances between acquirer and target countries. Our study highlights the role of non-corporate customers and of psychic distance in the cross-border expansion of commercial banks through M&As.

Suggested Citation

  • Gulamhussen, Mohamed Azzim & Hennart, Jean-François & Pinheiro, Carlos Manuel, 2016. "What drives cross-border M&As in commercial banking?," Journal of Banking & Finance, Elsevier, vol. 72(S), pages 6-18.
  • Handle: RePEc:eee:jbfina:v:72:y:2016:i:s:p:s6-s18
    DOI: 10.1016/j.jbankfin.2016.07.007
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    More about this item

    Keywords

    International banking; Market entry; Banks; Mergers and acquisitions;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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