![]() ![]() Many researcher have so far investigated that more than half of M&As are not economically effective why are mergers and acquisitions still done? The risk with unsuccessful M&As is getting bigger because merging companies are originally large and complex, so after a merger, if the performance is not good, the losses may be catastrophic. Mergers and acquisitions seem to be a never ending story, the competition is already very hard and the markets are global. Why are cross-border bank mergers in Europe so infrequent? What are the motives behind those cross-border deals that are executed? Do cross-border bank mergers improve the efficiency of the banking industry? Does the performance effect of bank M&As differ across domestic and cross-border transactions? The large majority of the remaining 346 cross-border transactions were acquisitions of credit institutions outside Europe. Over the period from 1995 to the first half of 2000, ECB (2000) records 2,153 mergers and acquisitions (M&As) of credit institutions in the European Union, of which 1,807 are domestic deals. However, the track record of bank merger activity over the 1990s displays a different picture. Following the single market programme (1992) and the introduction of the Euro (1999), the expectation was that consolidation in banking would take a pan-European dimension. The most visible manifestation of the restructuring is the enhanced pace of mergers and acquisitions among banks and other financial services providers across the European banking markets. The environmental and bank-characteristics that make a deal successful or unsuccessful are finallyidentified.Īs in most developed economies, the European banking sector is going through a process of restructuring, mainly caused by pervasive trends such as deregulation, disintermediation, technological progress and intensified competition. ![]() Moreover, these changesexhibit a particularly negative trend for cross-border deals to testify the importance ofgeographical relatedness in order to achieve better post-M&A performance. These changes in performance are directly attributable to theM&A operations, and would not have occurred in their absence. Hence, the improvements in cost efficiency appear to betransferred to bank clients. ![]() Despite the extensive and ongoing consolidation process in the banking industry, we find that M&A operations are associated with a slightdeterioration in return on equity, cash flow return and profit efficiency and with a markedimprovement in cost efficiency. Using a sample of 714 deals involving EU acquirers and targets located throughout the worldover the period 1991-2005, we investigate whether M&A operations are associated withimproved performance (measured using both standard accounting ratios and cost and alternative profit X-efficiency measures). This paper investigates whether M&A operations influence the performance of banks. ![]()
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