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Merger reasons and their impact: Evidence from the credit union industry

Author

Listed:
  • Steven E. Kozlowski

    (Fairfield University)

  • M. Kabir Hassan

    (University of New Orleans)

  • José Antonio Pérez-Amuedo

    (University of New Orleans)

  • Michael R. Puleo

    (Fairfield University)

Abstract

Using a unique dataset that includes each merger’s stated motivation, we explore the impact of credit union mergers of varying motivation and institutional size difference. We show that mergers motivated by financial distress lead to significantly more positive changes in earnings and capital ratios compared to mergers aimed at providing expanded services. We also document that target institution members reap most of the benefits in terms of abnormal savings and loan rate changes, although acquirers also benefit on average in distress driven mergers. Overall, our findings are consistent with the efficient management hypothesis and suggest acquirers subsequently utilize the assets of underperforming institutions more efficiently.

Suggested Citation

  • Steven E. Kozlowski & M. Kabir Hassan & José Antonio Pérez-Amuedo & Michael R. Puleo, 2024. "Merger reasons and their impact: Evidence from the credit union industry," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(4), pages 1020-1052, December.
    • Handle: RePEc:spr:jecfin:v:48:y:2024:i:4:d:10.1007_s12197-024-09685-8
    DOI: 10.1007/s12197-024-09685-8
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    More about this item

    Keywords

    Credit unions; Mergers; Credit union performance; CAMEL ratios;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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