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Financial Deepening, Banking Stability and Cross-border M&A Activity - Evidences from Emerging Countries

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  • Shiow-Ying Wen

Abstract

This study investigates the effect of financial deepening, banking stability and market structure on cross-border M&A activity in 13 emerging countries with data covering the period, 2003-2010. We show the empirical results of panel regression by sub grouping portfolio based on whether the firms are acquirer or target to cross-border M&A activity. For acquiring countries, the results show a significantly positive effect of the deepening indicator in cross-border M&A activity. Moreover, bank stability on the acquiring firms investing in the cross-border M&As shows a significantly positive effect. For targeting countries, the results show a significantly positive impact of the deepening indicator in cross-border M&A activity. A positive relation between the ratio of the amount of credit provided by banks and other financial institutions to the private sector to GDP in cross-border M&A activity is found as well. These findings imply that not only financial depth but also banking stability promotes cross-border M&A activity for emerging economies.

Suggested Citation

  • Shiow-Ying Wen, 2014. "Financial Deepening, Banking Stability and Cross-border M&A Activity - Evidences from Emerging Countries," Journal of Economics and Behavioral Studies, AMH International, vol. 6(10), pages 810-823.
    • Handle: RePEc:rnd:arjebs:v:6:y:2014:i:10:p:810-823
    DOI: 10.22610/jebs.v6i10.540
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