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Client Firms and Bank Mergers: Positive Wealth Effect of Bank Mergers on Distressed Firms

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  • Kensuke Tetsuya

    (Department of Economics, Himeji Dokkyo University, 7-2-1 Kamiohono Himeji Hyougo, 670-8524, Japan)

Abstract

Using the event study method, Karceskiet al. (2000) and Shinet al. (2003) determined that investors expected bank mergers to adversely impact some of the borrowing firms. Earlier studies on the effects of banking merger on borrower have not sufficiently considered the relationship between the economic conditions of the borrowers and the wealth effect of the bank mergers. Using the events study method, we investigated whether the news of several bank mergers between Japanese banks affected the market value of financially distressed borrowers. We found that news of bank mergers brought about a positive wealth effect on financially distressed borrowers.

Suggested Citation

  • Kensuke Tetsuya, 2005. "Client Firms and Bank Mergers: Positive Wealth Effect of Bank Mergers on Distressed Firms," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 113-130.
    • Handle: RePEc:wsi:rpbfmp:v:08:y:2005:i:01:n:s0219091505000282
    DOI: 10.1142/S0219091505000282
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    References listed on IDEAS

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    1. Jason Karceski & Steven Ongena & David C. Smith, 2005. "The Impact of Bank Consolidation on Commercial Borrower Welfare," Journal of Finance, American Finance Association, vol. 60(4), pages 2043-2082, August.
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    Cited by:

    1. Naohisa Goto & Konari Uchida, 2012. "How do banks resolve firms’ financial distress? Evidence from Japan," Review of Quantitative Finance and Accounting, Springer, vol. 38(4), pages 455-478, May.
    2. Tomas Mantecon & Paul Thistle, 2011. "The IPO market as a screening device and the going public decision: evidence from acquisitions of privately and publicly held firms," Review of Quantitative Finance and Accounting, Springer, vol. 37(3), pages 325-361, October.

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    More about this item

    Keywords

    Event studies; merger of banks; distressed firms;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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