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Post-merger Bank Efficiency and Stock Market Reaction: the Case of the US versus Europe

In: New Issues in Financial Institutions Management

Author

Listed:
  • Dimitris K. Chronopoulos
  • Claudia Girardone
  • John C. Nankervis

Abstract

The past two decades have been characterized by a wave of bank mergers that have reshaped both the US and the European financial systems. Specifically, the number of banks fell by almost 40 per cent in Europe and by over 45 per cent in the US between 1985 and 2003. The possibility that these bank mergers will yield efficiency gains for the consolidated banks has long been a subject of debate; yet empirical evidence documented in the literature up to 2000 does not provide an unambiguous answer to this question (see Amel et al. 2004). The consensus view from more recent studies is that bank mergers and acquisitions (M&As) can improve efficiency (see DeYoung et al. 2009). However, a probably more important issue is whether or not stock markets can accurately forecast these efficiency gains upon the announcement of an M&A operation.

Suggested Citation

  • Dimitris K. Chronopoulos & Claudia Girardone & John C. Nankervis, 2010. "Post-merger Bank Efficiency and Stock Market Reaction: the Case of the US versus Europe," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Franco Fiordelisi & Philip Molyneux & Daniele Previati (ed.), New Issues in Financial Institutions Management, chapter 7, pages 122-135, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-0-230-29915-3_8
    DOI: 10.1057/9780230299153_8
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    Cited by:

    1. Dimitris Chronopoulos & Claudia Girardone & John Nankervis, 2013. "How Do Stock Markets in the US and Europe Price Efficiency Gains from Bank M&As?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 43(3), pages 243-263, June.

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