What Drives Acquisitions in the EU Banking Industry? The Role of Bank Regulation and Supervision Framework, Bank Specific and Market Specific Factors
Article first published online: 6 APR 2011
© 2011 New York University Salomon Center and Wiley Periodicals, Inc.
Financial Markets, Institutions & Instruments
Volume 20, Issue 2, pages 29–77, May 2011
How to Cite
Pasiouras, F., Tanna, S. and Gaganis, C. (2011), What Drives Acquisitions in the EU Banking Industry? The Role of Bank Regulation and Supervision Framework, Bank Specific and Market Specific Factors. Financial Markets, Institutions & Instruments, 20: 29–77. doi: 10.1111/j.1468-0416.2011.00165.x
- Issue published online: 6 APR 2011
- Article first published online: 6 APR 2011
- Logistic regression;
We investigate the determinants of commercial bank acquisitions in the former fifteen countries of the European Union by evaluating the impact of bank-specific measures, such as size, growth and efficiency of banks, and external influences reflecting industry level differences in the regulatory and supervision framework, market environment and economic conditions. Our empirical analysis involves multinomial logit estimation at various levels in order to identify those characteristics that most consistently predict targets and acquirers from a sample of over 1400 commercial banks. The overall results indicate that, relative to banks that were not involved in the acquisitions, (i) targets and acquirers were significantly larger, less well capitalized and less cost efficient, (ii) targets were less profitable with lower growth prospects, and acquirers more profitable with higher growth prospects, (iii) external factors have affected targets and acquirers differently, and their effects have not been consistent or robust to sample size changes.