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Bank Acquisitiveness and Financial Crisis Vulnerability

Author

Listed:
  • Saqib Aziz

    (ESC Rennes School of Business)

  • Michael Dowling

    (ESC Rennes School of Business)

  • Jean-Jacques Lilti

    (University of Rennes 1, CREM (UMR CNRS 6211))

Abstract

We investigate the relation between European bank acquisitiveness during the period 1990-2006 and the vulnerability of banks to the financial crisis. Our main tests use distance to default and Z-score ratios to estimate banks impact from the financial crisis in terms of bankruptcy risk and solvency. The findings shed new light on whether bank acquisitions really did contribute towards weakness; and suggest that only acquisitions of investment banking assets increased risk, while acquisition of retail banking assets actually lowered solvency risk.

Suggested Citation

  • Saqib Aziz & Michael Dowling & Jean-Jacques Lilti, 2016. "Bank Acquisitiveness and Financial Crisis Vulnerability," Bankers, Markets & Investors, ESKA Publishing, issue 143, pages 26-44, July-Augu.
    • Handle: RePEc:rbq:journl:i:143:p:26-44
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    More about this item

    Keywords

    Financial Crisis; Mergers and Acquisitions; Probability of Default; Solvency; Investment Banking;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • 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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