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

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  • Andrés Felipe García-Suaza

    ()

  • José Eduardo Gómez-González

    ()

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

  • Andrés Felipe García-Suaza & José Eduardo Gómez-González, 2009. "The Competing Risks of Acquiring and Being Acquired: Evidence from Colombia´s Financial Sector," BORRADORES DE ECONOMIA 005676, BANCO DE LA REPÚBLICA.
  • Handle: RePEc:col:000094:005676
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    References listed on IDEAS

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    1. Diaz, Belen Diaz & Olalla, Myriam Garcia & Azofra, Sergio Sanfilippo, 2004. "Bank acquisitions and performance: evidence from a panel of European credit entities," Journal of Economics and Business, Elsevier, vol. 56(5), pages 377-404.
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    7. 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, May.
    8. 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.
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    12. Dario Focarelli & Fabio Panetta & Carmelo Salleo, 1999. "Why do banks merge? some empirical evidence from Italy," Proceedings 646, Federal Reserve Bank of Chicago.
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    14. David C. Wheelock & Paul W. Wilson, 2000. "Why do Banks Disappear? The Determinants of U.S. Bank Failures and Acquisitions," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 127-138, February.
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    16. 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. Juan Pablo Zárate Perdomo & Adolfo León Cobo Serna & José Eduardo Gómez-González, 2012. "Lecciones de las crisis financieras recientes para el diseño e implementación de las políticas monetarias," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE, vol. 30(69), pages 258-293, December.
    2. Juan Amador & José Gómez-González & Andrés Pabón, 2013. "Loan growth and bank risk: new evidence," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 27(4), pages 365-379, December.
    3. Juan Pablo Zárate Perdomo & Adolfo Léon Cobo Serna & Jose Eduardo Gómez González, 2012. "Lecciones de las crisis financieras recientes para el diseño e implementación de las políticas monetaria y financiera en Colombia," Borradores de Economia 708, Banco de la Republica de Colombia.

    More about this item

    Keywords

    Survival analysis; competing risk models; Colombia;

    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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