IDEAS home Printed from https://ideas.repec.org/p/wop/pennin/94-10.html
   My bibliography  Save this paper

Performance Changes and Shareholder Wealth Creation Associated with Mergers of Publicly Traded Banking Institutions

Author

Listed:
  • Steven Pilloff

Abstract

Improvements in the technological infra-structure have freed financial institutions from many of the constraints of geography. Yet when courts are asked to determine liability after some event interferes with the payment of an international bank deposit, they often fall back on the notion of where the deposit is kept. This emphasis implicitly treats a bank deposit as if it is more a physical commodity at an unambiguous location where an exchange must take place, rather than as an electronic bookkeeping entry that spans national borders. The authors summarize 32 court decisions from five countries that reflect the variety of settings in which problems regarding the allocation of political risk in cross-border deposits can arise. The cases noted arose from some of the most traumatic events of the 20th century. The continuing growth in cross-border deposits suggests that conflicts over sovereign risk allocation will occur with increasing frequency. The authors note several common features of the cases: The international aspect of deposit transactions. International conflict of laws. The lack of risk allocation provisions in deposit agreements. The authors then evaluate the jumbled legal framework underlying the decisions and question whether the framework provides efficient rules for allocating political risks. Based on this analysis, the paper supports an alternative approach based on the assignment of property rights and the allocation of commercial risk. The authors argue that the distribution of commercial risks generally is efficient and that the distinction between commercial and political risks is neither useful nor definable. The advantage of adopting a commercial perspective regarding the allocation of political risks is that it affords banks and depositors greater ability to forecast the outcome of future cases. This may prevent some litigation by increasing the likelihood that parties will agree on the relative probability of the outcome in court. Moreover, it would provide a more efficient legal framework for cross-border deposit transactions.

Suggested Citation

  • Steven Pilloff, 1994. "Performance Changes and Shareholder Wealth Creation Associated with Mergers of Publicly Traded Banking Institutions," Center for Financial Institutions Working Papers 94-10, Wharton School Center for Financial Institutions, University of Pennsylvania.
  • Handle: RePEc:wop:pennin:94-10
    Note: This paper is only available in hard copy
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Soylu, Ali & Durmaz, Nazif, 2012. "Profitability of Interest-free vs. Interest-based Banks in Turkey," MPRA Paper 36376, University Library of Munich, Germany.
    2. Resti, Andrea, 1998. "Regulation Can Foster Mergers, Can Mergers Foster Efficiency? The Italian Case," Journal of Economics and Business, Elsevier, vol. 50(2), pages 157-169, March.
    3. Juan Sergio Lopez & Alessandra Appenini & Stefania P.S. Rossi & Roberto Di Salvo & Maria Carmela Mazzilis & Andrea Guidi, 2002. "Italian Mutual Banks: Performance, Efficiency and Mergers and Acquisitions," SUERF Studies, SUERF - The European Money and Finance Forum, number 15 edited by Morten Balling, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wop:pennin:94-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Thomas Krichel (email available below). General contact details of provider: https://edirc.repec.org/data/fiupaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.