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Bank Consolidation and Systemic Risk: M&A During the 2008 Financial Crisis

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  • Gregory D. Maslak

    (Bowdoin College)

  • Gonca Senel

    (Bowdoin College)

Abstract

In this paper, we analyze the relationship between US bank consolidation and systemic risk before, during, and after the 2008 financial crisis. We find that mergers during the crisis decreased market-adjusted systemic risk. This effect was more pronounced for mergers with smaller acquirers of larger targets. Meanwhile, mergers of larger banks increased the aggregate systemic risk. In the years following the crisis, we find that banks that merged during the crisis had lower return volatility and fewer nonperforming loans than non-merged banks. Comparing pre-and post-crisis mergers, we do not find a significant difference with respect to their effect on systemic risk.

Suggested Citation

  • Gregory D. Maslak & Gonca Senel, 2023. "Bank Consolidation and Systemic Risk: M&A During the 2008 Financial Crisis," Journal of Financial Services Research, Springer;Western Finance Association, vol. 63(2), pages 201-220, April.
    • Handle: RePEc:kap:jfsres:v:63:y:2023:i:2:d:10.1007_s10693-022-00380-5
    DOI: 10.1007/s10693-022-00380-5
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    References listed on IDEAS

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    1. Nevermann, Daniel & Heckmann, Lotta, 2023. "Effects of mergers on network models of the financial system," Discussion Papers 29/2023, Deutsche Bundesbank.
    2. Nevermann, Daniel & Heckmann-Draisbach, Lotta, 2023. "Effects of mergers on network models of the financial system," International Review of Financial Analysis, Elsevier, vol. 90(C).

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