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The Competing Risks of Acquiring and Being Acquired: Evidence from Colombia�s Financial Sector

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  • Andr�s Felipe Garc�a-Suaza
  • Jos� Eduardo G�mez-Gonz�lez

Abstract

This paper studies the determinants of the probability of participating in a process of merging or acquisition for financial institutions in Colombia. We use survival analysis techniques and competing risks models to estimate the probability of participating in such processes as an acquiring or acquired firm. Using an especially rich database containing financial information of Colombian banks for the period 1990 - 2007, we find that both macroeconomic and microeconomic variables are important determinants of such probability. However, there are differential effects for the acquiring firm and the acquired firm. Particularly, while firm size and solvency result significant determinants of the probability of being an acquiring firm, efficiency is an important determinant of the probability of being acquired. Also, the concentration index, that plays no role for acquiring firms, plays an important role in the probability of being acquired.

Suggested Citation

  • Andr�s Felipe Garc�a-Suaza & Jos� Eduardo G�mez-Gonz�lez, 2009. "The Competing Risks of Acquiring and Being Acquired: Evidence from Colombia�s Financial Sector," Borradores de Economia 5676, Banco de la Republica.
    • Handle: RePEc:col:000094:005676
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    References listed on IDEAS

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    2. Houston, Joel F. & James, Christopher M. & Ryngaert, Michael D., 2001. "Where do merger gains come from? Bank mergers from the perspective of insiders and outsiders," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 285-331, May.
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    4. Andrés Garcia & José Gomez, 2009. "Determinantes de las fusiones y adquisiciones en el sistema financiero colombiano. 1990-2007," Revista de Economía del Rosario, Universidad del Rosario.
    5. H.P. Huizinga & J.H.M. Nelissen & R. Vander Vennet, 2001. "Efficiency Effects of Bank Mergers and Acquisitions," Tinbergen Institute Discussion Papers 01-088/3, Tinbergen Institute.
    6. Levin, Dan, 1990. "Horizontal Mergers: The 50-Percent Benchmark," American Economic Review, American Economic Association, vol. 80(5), pages 1238-1245, December.
    7. José E. Gómez-Gonzalez & Nicholas M. Kiefer, 2009. "Bank Failure: Evidence From The Colombian Financial Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(2), pages 15-31.
    8. M. Meschi, 1997. "Analytical Perspectives on Mergers and Acquisitions: A Survey," CIBS Research Papers in International Business 5-97, London South Bank University CIBS.
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    Cited by:

    1. Diego Restrepo-Tobón & Jim Sánchez-González, 2021. "Measuring profit efficiency of Colombian banks: a composite non-standard profit function approach," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 33(2), pages 234-252.
    2. Diego Restrepo-Tobón & Jim S�nchez-Gonz�lez, 2018. "Measuring Profit Efficiency of Colombian Banks: A Composite Nonstandard Profit Function Approach," Documentos de Trabajo de Valor Público 16789, Universidad EAFIT.

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    Keywords

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    JEL classification:

    • 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
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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