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Determinants of premiums paid in European banking mergers and acquisitions

Author

Listed:
  • Belen Diaz Diaz
  • Sergio Sanfilippo Azofra

Abstract

This study is aimed at analysing the determinants of premiums paid in European banking mergers and acquisitions (M&A). This analysis will highlight the reasons for the wave of bank M&A during the 1990s. The empirical study analyses a sample of 81 European banking M&A from 1994 to 2000. The results show that there are different variables that make the target bank attractive to the acquirer, such as the percentage of equity, the percentage of loans and financial profitability. However, geographical and product diversification have not been considered by the acquirers as a reason to pay higher premiums.

Suggested Citation

  • Belen Diaz Diaz & Sergio Sanfilippo Azofra, 2009. "Determinants of premiums paid in European banking mergers and acquisitions," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 1(4), pages 358-380.
  • Handle: RePEc:ids:injbaf:v:1:y:2009:i:4:p:358-380
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    Cited by:

    1. Hagendorff, Jens & Hernando, Ignacio & Nieto, Maria J. & Wall, Larry D., 2012. "What do premiums paid for bank M&As reflect? The case of the European Union," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 749-759.
    2. Phil Molyneux & Klaus Schaeck & Tim Zhou, 2011. "‘Too Systemically Important to Fail’ in Banking," Working Papers 11011, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    3. Molyneux, Philip & Schaeck, Klaus & Zhou, Tim Mi, 2014. "‘Too systemically important to fail’ in banking – Evidence from bank mergers and acquisitions," Journal of International Money and Finance, Elsevier, vol. 49(PB), pages 258-282.

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