IDEAS home Printed from https://ideas.repec.org/a/spr/jecfin/v29y2005i1p85-96.html
   My bibliography  Save this article

Bank mergers and components of risk: An evaluation

Author

Listed:
  • Suchismita Mishra
  • Arun Prakash
  • Gordon Karels
  • Manferd Peterson

Abstract

The present study empirically examines the contribution of the acquired banks in only the nonconglomerate types of mergers (i.e., banks with banks), where the bulk of the payment is in the form of equity to the acquiring bank and finds overwhelmingly statistically significant evidence that nonconglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Therefore, it seems that diversification may be a possible motive for bank mergers. Copyright Springer 2005

Suggested Citation

  • Suchismita Mishra & Arun Prakash & Gordon Karels & Manferd Peterson, 2005. "Bank mergers and components of risk: An evaluation," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(1), pages 85-96, March.
    • Handle: RePEc:spr:jecfin:v:29:y:2005:i:1:p:85-96
    DOI: 10.1007/BF02761544
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF02761544
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF02761544?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Melicher, Ronald W & Rush, David F, 1973. "The Performance of Conglomerate Firms: Recent Risk and Return Experience," Journal of Finance, American Finance Association, vol. 28(2), pages 381-388, May.
    2. Hamada, Robert S, 1969. "Portfolio Analysis, Market Equilibrium and Corporation Finance," Journal of Finance, American Finance Association, vol. 24(1), pages 13-31, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dzhagityan, Eduard, 2012. "The effect of ex post risks on post-M&A performance efficiency," MPRA Paper 63147, University Library of Munich, Germany.
    2. Vallascas, Francesco & Hagendorff, Jens, 2011. "The impact of European bank mergers on bidder default risk," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 902-915, April.
    3. Austin, Rebekah E. & Dunham, Lee M., 2022. "Do FinTech acquisitions improve the operating performance or risk profiles of acquiring firms?," Journal of Economics and Business, Elsevier, vol. 121(C).
    4. Brealey, Richard A & Cooper, Ian A & Kaplanis, Evi, 2019. "The effect of mergers on US bank risk in the short run and in the long run," Journal of Banking & Finance, Elsevier, vol. 108(C).
    5. Ivo Jansen & Lee Sanning & Nathan Stuart, 2015. "Do hubris and the information environment explain the effect of acquirers’ size on their gains from acquisitions?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(2), pages 211-234, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Clark, Brian & Jones, Jonathan & Malmquist, David, 2023. "Leverage and the cost of capital for U.S. banks," Journal of Banking & Finance, Elsevier, vol. 155(C).
    2. Hikmet Akyol & Selim Basar, 2024. "Empirical Analysis of Turkish Banking Sector Institutional and Macroeconomic Determinants of Risks," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(74-1), pages 59-98, June.
    3. Natalya Delcoure & Ross Dickens, 2004. "REIT and REOC Systematic Risk Sensitivity," Journal of Real Estate Research, American Real Estate Society, vol. 26(3), pages 237-254.
    4. Abdullah Mamun & Dev Mishra, 2012. "Industry Merger Intensity and Cost of Capital," International Review of Finance, International Review of Finance Ltd., vol. 12(4), pages 469-490, December.
    5. Core, John E. & Schrand, Catherine M., 1999. "The effect of accounting-based debt covenants on equity valuation1," Journal of Accounting and Economics, Elsevier, vol. 27(1), pages 1-34, February.
    6. Frederick Adjei, 2012. "Debt dependence and corporate performance in a financial crisis: evidence from the sub-prime mortgage crisis," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(1), pages 176-189, January.
    7. Georg Junge & Peter Kugler, 2018. "Optimal equity capital requirements for large Swiss banks," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 154(1), pages 1-21, December.
    8. A. D. Castagna & Z. P. Matolcsy, 1978. "The Relationship Between Accounting Variables and Systematic Risk and the Prediction of Systematic Risk," Australian Journal of Management, Australian School of Business, vol. 3(2), pages 113-126, October.
    9. Jang Youn Cho & Kooyul Jung, 1991. "The differential information content of earnings announcements: The case of merger," Contemporary Accounting Research, John Wiley & Sons, vol. 8(1), pages 42-61, September.
    10. Boubakri, Narjess & Guedhami, Omrane & Mishra, Dev & Saffar, Walid, 2012. "Political connections and the cost of equity capital," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 541-559.
    11. Ljubownikow, Grigorij & Ang, Siah Hwee, 2020. "Competition, diversification and performance," Journal of Business Research, Elsevier, vol. 112(C), pages 81-94.
    12. Peter Brusov & Tatiana Filatova & Natali Orekhova, 2023. "The Generalization of the Brusov–Filatova–Orekhova Theory for the Case of Payments of Tax on Profit with Arbitrary Frequency," Springer Books, in: The Brusov–Filatova–Orekhova Theory of Capital Structure, chapter 0, pages 217-239, Springer.
    13. Rao Ramesh K. S. & Stevens Eric C, 2006. "The Firm's Cost of Capital, Its Effective Marginal Tax Rate, and the Value of the Government's Tax Claim," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-57, January.
    14. Tobias Quill, 2020. "Valuation Techniques Under Construction—About the Dissemination of the CAPM in German Judicial Valuation," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(2), pages 299-341, April.
    15. John McDonald, 2010. "The Q theory of investment, the capital asset pricing model and the capitalization rate in real estate valuation," Applied Financial Economics, Taylor & Francis Journals, vol. 20(14), pages 1133-1143.
    16. Magni, Carlo Alberto, 2005. "Theoretical Flaws In The Use Of The Capm For Investment Decisions," MPRA Paper 6330, University Library of Munich, Germany, revised Nov 2007.
    17. Jongmoo Jay Choi & Frank J. Fabozzi & Uzi Yaari, 1989. "Optimum Corporate Leverage With Risky Debt: A Demand Approach," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 12(2), pages 129-142, June.
    18. Robert S. Harris, 1980. "The Impact Of Corporate Mergers On Acquiring Firms," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 3(3), pages 283-295, September.
    19. Rode, David C. & Fischbeck, Paul S., 2019. "Regulated equity returns: A puzzle," Energy Policy, Elsevier, vol. 133(C).
    20. Roland Pérez, 1971. "Décisions financières et valeur de l'entreprise. Deux approches néo-classiques alternatives," Revue Économique, Programme National Persée, vol. 22(5), pages 792-811.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jecfin:v:29:y:2005:i:1:p:85-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.