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The Static and Dynamic Effects of Mergers and Acquisitions on Productivity in The period Post-Subprime Crisis: An Empirical Application to the Banking Sector in the European Union

Listed author(s):
  • Hassen Toumi


    (University of Economics and Management of Sfax, Tunisia)

  • Fakhri Issaoui


    (College of Business Administration, Majmaa University, Saudi Arabia)

  • Bilel Ammouri


    (University of Carthage (UR MASE) and University of Tunis (ESSEC Tunis), Tunisia)

  • Wassim Touili


    (Ecole Supérieure de Commerce de Tunis ESCT, Tunisia)

This article aims to detect the dynamic effect of M&A of European banks on productivity during the period from 2005 to 2013. The estimation of our model by the GMM method allowed us to detect the following results. First, in the long term, the European banking structure seems to be submitted to the divergence phenomenon which means that the banking industry will probably governed by monopolistic structures which will share the market equally or nearly equal. Second, the production factors(labour and capital) have had positive and significant effects on the banking product. However, the returns to scale are found to be decreasing as long as the sum of the labour coefficient (0.243) of fixed assets (0.16) and liquid assets (0.351) is less than unity. Third, the time had exerted a negative and significant effect on production which questions the validity of the chosen period characterized by the advent of the subprime crisis. Fourthly, the M&A had a significant positive effect on production which affirm that in a pessimistic environment; it seems that the M&A strategies can be effective solutions to overcome the crisis.

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Article provided by Weissberg Publishing in its journal Economic Research Guardian.

Volume (Year): 5 (2015)
Issue (Month): 2 (December)
Pages: 143-158

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Handle: RePEc:wei:journl:v:5:y:2015:i:2:p:143-158
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  1. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
  2. Angbazo, Lazarus, 1997. "Commercial bank net interest margins, default risk, interest-rate risk, and off-balance sheet banking," Journal of Banking & Finance, Elsevier, vol. 21(1), pages 55-87, January.
  3. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
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