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Performance and asset management effects of bank acquisitions

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  • Ben R. Craig
  • Joao A. C. Santos

Abstract

An analysis of how bank acquisitions affect the performance and asset management of the acquired bank, its acquirer, and the newly formed banking organization, showing that after the acquisition, the acquired bank is transformed along a wide variety of dimensions such that it becomes a replica of the acquirer.

Suggested Citation

  • Ben R. Craig & Joao A. C. Santos, 1996. "Performance and asset management effects of bank acquisitions," Working Papers (Old Series) 9619, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9619
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    References listed on IDEAS

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    1. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
    2. Stephen A. Rhoades, 1986. "The operating performance of acquired firms in banking before and after acquisition," Staff Studies 149, Board of Governors of the Federal Reserve System (U.S.).
    3. Donald T. Savage, 1993. "Interstate banking: a status report," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Dec, pages 1075-1089.
    4. William C. Hunter & Larry D. Wall, 1989. "Bank merger motivations: a review of the evidence and an examination of key target bank characteristics," Economic Review, Federal Reserve Bank of Atlanta, issue Sep, pages 2-19.
    5. Jeffrey A. Clark, 1988. "Economies of scale and scope at depository financial institutions: a review of the literature," Economic Review, Federal Reserve Bank of Kansas City, vol. 73(Sep), pages 16-33.
    6. Cornett, Marcia Millon & Tehranian, Hassan, 1992. "Changes in corporate performance associated with bank acquisitions," Journal of Financial Economics, Elsevier, vol. 31(2), pages 211-234, April.
    7. Millon Cornett, Marcia & De, Sankar, 1991. "Common stock returns in corporate takeover bids: Evidence from interstate bank mergers," Journal of Banking & Finance, Elsevier, vol. 15(2), pages 273-295, April.
    8. Robert J. Lawrence, 1971. "Operating policies of bank holding companies: part I," Staff Studies 59, Board of Governors of the Federal Reserve System (U.S.).
    9. John H. Boyd & Stanley L. Graham, 1991. "Investigating the banking consolidation trend," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 15(Spr), pages 3-15.
    10. Mingo, John J., 1975. "Capital Management and Profitability of Prospective Holding Company Banks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 10(2), pages 191-203, June.
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    Cited by:

    1. Ben R. Craig & Joao A. C. Santos, 1997. "The risk effects of bank acquisitions," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 25-35.
    2. Morris Knapp & Alan Gart & David Becher, 2005. "Post‐Merger Performance of Bank Holding Companies, 1987–1998," The Financial Review, Eastern Finance Association, vol. 40(4), pages 549-574, November.
    3. Rubi Ahmad & Mohamed Ariff & Michael Skully, 2007. "Factors Determining Mergers of Banks in Malaysia’s Banking Sector Reform," Multinational Finance Journal, Multinational Finance Journal, vol. 11(1-2), pages 1-31, March-Jun.
    4. Vallascas, Francesco & Hagendorff, Jens, 2011. "The impact of European bank mergers on bidder default risk," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 902-915, April.
    5. Pablo Alonso González & Irene Albarrán Lozano & Andrea Giuliodori Khalil, 2006. "El Impacto del descenso en los Tipos de Interés sobre el margen financiero de las Cajas de Ahorros españolas," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 0(1), pages 98-136, January.
    6. Brook, Yaron & Hendershott, Robert J. & Lee, Darrell, 2000. "Corporate governance and recent consolidation in the banking industry," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 141-164, July.

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    Keywords

    Asset-liability management; Bank mergers;

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