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Cross-border bank acquisitions: Is there a performance effect?

  • Ricardo Correa

This paper uses a unique database that includes deal and bank balance sheet information for 220 cross-border acquisitions between 1994 and 2003 to analyze the characteristics and performance effects of international takeovers on target banks. A discrete choice estimation shows that banks are more likely to get acquired in a cross-border deal if they are large, bad performers, in a small country, and when the banking sector is concentrated. Post-acquisition performance for target banks does not improve in the first two years relative to domestically-owned financial institutions. This result is explained by a decrease in the banks' net interest margin in developed countries and an increase in overhead costs in emerging economies.

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File URL: http://www.federalreserve.gov/pubs/ifdp/2008/922/default.htm
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File URL: http://www.federalreserve.gov/pubs/ifdp/2008/922/ifdp922.pdf
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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series International Finance Discussion Papers with number 922.

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Date of creation: 2008
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Handle: RePEc:fip:fedgif:922
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