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Mega-mergers in the US banking industry

Author

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  • Said Elfakhani
  • Rita Ghantous
  • Imad Baalbaki

Abstract

Historically, financial markets have witnessed several consolidation trends. The year 1998, however, surpassed them all in volume and size of individual deals. This paper utilizes the event study approach to analyse the mega-mergers that took place in the banking industry during 1998, namely that of Travelers Group with Citicorp, NationsBank with BankAmerica, and Bank One with First Chicago NBD. A test of daily abnormal returns is conducted to find out the impact of each of the three mergers on shareholders' wealth from both the acquired and acquirer's perspective. The results obtained indicate that the market's reaction was positive during the on-event sub-period (i.e. days 0 and 1) for both the acquired and acquirer in the Travelers-Citicorp merger; only for the acquirer in the NationsBank-BankAmerica deal, and for the acquired firm in the case of Bank One-First Chicago NBD merger.

Suggested Citation

  • Said Elfakhani & Rita Ghantous & Imad Baalbaki, 2003. "Mega-mergers in the US banking industry," Applied Financial Economics, Taylor & Francis Journals, vol. 13(8), pages 609-622.
    • Handle: RePEc:taf:apfiec:v:13:y:2003:i:8:p:609-622
    DOI: 10.1080/0960310032000050669
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    References listed on IDEAS

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    Cited by:

    1. Peter Egger & Franz R. Hahn, 2006. "Endogenous Bank Mergers and Their Impact on Banking Performance," WIFO Working Papers 271, WIFO.
    2. Joan Calzada & Xavier Fageda & Fernando Martínez-Santos, 2023. "Mergers and bank branches: two decades of evidence from the USA," Empirical Economics, Springer, vol. 64(5), pages 2411-2447, May.
    3. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.
    4. Avdasheva, Svetlana & Tsytsulina, Dina, 2015. "The effects of M&As in highly concentrated domestic vis-à-vis export markets: By the example of Russian metal industries," Research in International Business and Finance, Elsevier, vol. 34(C), pages 368-382.

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