Market concentration and bank M&As: Evidence from the European sovereign debt crisis

George Leledakis and Emmanouil G. Pyrgiotakis

MPRA Paper from University Library of Munich, Germany

Abstract: Using a sample of 312 bank M&As announced between 1998 and 2016 in the EU-27 countries, this paper investigates the impact of market concentration and the European sovereign debt crisis on the way investors react to these corporate events. In Western European countries, we find results which contrast the conventional wisdom that acquiring banks lose around the merger announcement date. In fact, since 2009, acquiring banks shareholders gain approximately $34 million around the announcement, a $56 million improvement compared to the pre-crisis period. These documented shareholder gains are also accompanied by significant improvements in post-merger profitability. Markedly, we link this superior performance of the post-2008 acquirers with the degree of market concentration in the Western European region. Finally, results for the Eastern European countries indicate that the crisis did not have a significant impact on the quality of bank M&As in the region.

Keywords: European sovereign debt crisis; bank mergers and acquisitions; market concentration; event study (search for similar items in EconPapers)
JEL-codes: G01 G14 G15 G21 G34 (search for similar items in EconPapers)
Date: 2019-08-26
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-com, nep-fmk and nep-ind
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