Lozano-Vivas, A., Kumbhakar, S.C., Fethi, M.D. et al. (1 more author) (2011) Consolidation in the European banking industry: how effective is it? Journal of Productivity Analysis, 36 (3). 247 - 261. ISSN 0895-562X
Abstract
The European banking industry is becoming increasingly consolidated as banks engage in domestic and cross-border merger and acquisition (M&A) activities. Due to cultural differences in cross-border consolidations, the benefits of domestic and cross-border consolidations are likely to differ. This paper examines the effectiveness of merger processes, with a detailed analysis of both domestic and cross-border consolidations in Europe from 1998 to 2004. Effectiveness is measured via several criteria: improvement in costs, return on assets (ROA), and return on equity (ROE). To analyze potential cost efficiency improvement, we use a stochastic cost frontier approach. The same methodology is used for ROA and ROE to estimate efficiency in profitability. Finally, considering cross-border mergers as a form of entry, we carry out an analysis of the entry effect in response to the performance and profitability of the incumbent market participants. Results show that mergers in the European banking industry have been effective. Although domestic M&As are more common than cross-border M&As, banks involved in cross-border M&As are more efficient. Moreover, cross-border merged banks seem to outperform incumbent banks.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © Springer Science+Business Media, LLC 2011 |
Keywords: | Cross-border and in-border merger and acquisitions; Stochastic frontier; Return on assets; Return on equity |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 05 Feb 2016 14:12 |
Last Modified: | 10 Mar 2016 21:53 |
Published Version: | http://dx.doi.org/10.1007/s11123-011-0212-8 |
Status: | Published |
Publisher: | Springer Verlag |
Refereed: | Yes |
Identification Number: | 10.1007/s11123-011-0212-8 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:92028 |