Accounting for distress in bank mergers

Michael Koetter, J. Bos, Frank Heid, Clemens Kool, James W. Kolari and Daniel Porath

No 2005,09, Discussion Paper Series 2: Banking and Financial Studies from Deutsche Bundesbank

Abstract: The inability of most bank merger studies to control for hidden bailouts may lead to biased results. In this study, we employ a unique data set of approximately 1,000 mergers to analyze the determinants of bank mergers. We use data on the regulatory intervention history to distinguish between distressed and non-distressed mergers. We find that, among merging banks, distressed banks had the worst profiles and acquirers perform somewhat better than targets. However, both distressed and non-distressed mergers have worse CAMEL profiles than our control group. In fact, non-distressed mergers may be motivated by the desire to forestall serious future financial distress and prevent regulatory intervention.

Keywords: Mergers; bailout; X-efficiency; multinomial logit (search for similar items in EconPapers)
JEL-codes: G14 G21 G34 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-ban, nep-com, nep-dcm, nep-eff, nep-fin and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Related works:
Journal Article: Accounting for distress in bank mergers (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bubdp2:4264

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