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J Financ Serv Res (2009) 36:87110
DOI 10.1007/s10693-009-0066-7
Robert DeYoung & Douglas D. Evanoff & Philip Molyneux
Received: 30 June 2009 /Accepted: 1 July 2009 /
Published online: 24 July 2009# Springer Science + Business Media, LLC 2009
Abstract This paper provides a review of the recent financial institution mergers and acquisition (M&A) literature covering over 150 studies. Several robust themes emerge in the post-2000 literature. North American bank mergers are (or can be) efficiency improving, although the event-study literature presents a mixed picture regarding stockholder wealth creation. In contrast, European bank mergers appear to have resulted in both efficiency gains and stockholder value enhancement. There is robust evidence linking high CEO compensation to merger activity and strong implications that deals can be motivated by the desire to obtain too-big-to-fail status and reap the associated subsidies. Evidence on the impact of both geographic and product diversification via merger is mixed. There is growing evidence that financial institution M&As can adversely impact certain types of borrowers, depositors, and other external stakeholders.
Keywords Banks . Financial institutions . Literature review . Mergers and acquisitions
JEL G21 . G34
This paper has benefited from valuable insights from a large number of individuals. We would particularly like to thank Robert Adams, Yener Altunbas, Rym Ayadi, Santiago Carbo, Barbara Casu, Ken Cyree, Franco Fiordelisi, Regina Frank Claudia Girardone, John Goddard, Ken Jones, Ximo Maudos, David Marquez, Fabio Panetta, Evren Ors, Fotios Pasiouras, Klaus Schaek, Jon Williams and John Wilson. All remaining errors, as usual, rest with the authors.
R. DeYoung (*)
University of Kansas, Lawrence, KS, USA e-mail: [email protected]
D. D. Evanoff
Federal Reserve Bank of Chicago, Chicago, IL, USA
P. Molyneux
Bangor University, Bangor, Wales, UK
Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature
88 J Financ Serv Res (2009) 36:87110
1 Introduction
The firms that comprise the global financial system have been consolidating since the 1980s and are likely to face further re-structuring in the aftermath of the recent crisis in financial markets. The number of financial services firms has declined significantly in recent years and the typical surviving firm is larger, more diversified, and operates in more places than ever before. The broad forces promoting this consolidation are well-known and have been documented...