Are bank mergers procyclical or countercyclical? Theory and evidence from Taiwan
This work develops a theory of countercyclical bank mergers and finds supported empirical evidence in Taiwan. Procyclical (countercyclical) mergers tend to involve higher (lower) measures of merger activities during economic booms than downturns. Several previous studies suggest that bank mergers are procyclical in developed countries, possibly driven by the higher capital liquidity that accompanies an economic expansion. Alternatively, this work emphasizes the role of economic situation and the government in bank mergers. Our results suggest that the depressed industrial situation, which leads to severe competitive market and impoverished revenue basis, drives banks to increase their market share for reducing competition through merger with the merger cost as low as possible by utilizing government's offering and the beneficial condition of stock market. Merger activities may be explained by the motivation of generating higher profit and able to survive, whereas the banks with insufficient competitiveness are more likely to suffer serious loss and thus forced to be merged.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 23 (2013)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAFE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAFE20|
When requesting a correction, please mention this item's handle: RePEc:taf:apfiec:v:23:y:2013:i:1:p:1-14. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.