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Impact of the Financial Crisis on Banking Acquisitions: A Look at Shareholder Wealth

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  • Rekha Rao-Nicholson
  • Julie Salaber

Abstract

This paper examines the influence of the 2007-08 financial crisis on value creation for acquirer's shareholders in the banking industry using a sample of 883 deals over 2004-12. Applying an exploratory and top-down approach, banking acquisitions are considered at the global level, narrowing the analysis step by step to consider domestic versus cross-border acquisitions. Then cross-border deals are split based on the economic development of the acquirer and target countries. It is observed that only acquisitions involving emerging-economy acquirers and developed-economy targets generate positive and significant returns to shareholders after the crisis. Major changes in the global acquisition landscape are also observed since 2007, with emerging-economy banks increasing their acquisition activity, both nationally and internationally.

Suggested Citation

  • Rekha Rao-Nicholson & Julie Salaber, 2015. "Impact of the Financial Crisis on Banking Acquisitions: A Look at Shareholder Wealth," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(1), pages 87-117, February.
    • Handle: RePEc:taf:ijecbs:v:22:y:2015:i:1:p:87-117
    DOI: 10.1080/13571516.2014.982901
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    References listed on IDEAS

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    1. Farouk Soussa & Tracy Wheeler, 2006. "Do announcements of bank acquisitions in emerging markets create value?," Bank of England working papers 315, Bank of England.
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    Cited by:

    1. Leledakis, George N. & Pyrgiotakis, Emmanouil G., 2019. "Market concentration and bank M&As: Evidence from the European sovereign debt crisis," MPRA Paper 95739, University Library of Munich, Germany.
    2. Narendar Rao & K. Reddy, 2015. "The impact of the global financial crisis on cross-border mergers and acquisitions: a continental and industry analysis," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 309-341, December.
    3. Yildirim, Canan & Efthyvoulou, Georgios, 2018. "Bank value and geographic diversification: regional vs global," Journal of Financial Stability, Elsevier, vol. 36(C), pages 225-245.
    4. Rao-Nicholson, Rekha & Salaber, Julie & Cao, Tuan Hiep, 2016. "Long-term performance of mergers and acquisitions in ASEAN countries," Research in International Business and Finance, Elsevier, vol. 36(C), pages 373-387.
    5. Vanwalleghem, Dieter & Yildirim, Canan & Mukanya, Anthony, 2020. "Leveraging local knowledge or global advantage: Cross border bank mergers and acquisitions in Africa," Emerging Markets Review, Elsevier, vol. 42(C).

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