The views expressed herein are those of the authors and do not necessarily reflect the views of the Board of Governors of the Federal Reserve System or its staff. The authors would like to thank Robin Prager for helpful comments and David Kite and Miranda Mei for excellent research assistance.
Acquisition Targets and Motives in the Banking Industry
Article first published online: 10 AUG 2009
© 2009 The Ohio State University No claim to original US government works
Journal of Money, Credit and Banking
Volume 41, Issue 6, pages 1167–1187, September 2009
How to Cite
HANNAN, T. H. and PILLOFF, S. J. (2009), Acquisition Targets and Motives in the Banking Industry. Journal of Money, Credit and Banking, 41: 1167–1187. doi: 10.1111/j.1538-4616.2009.00251.x
- Issue published online: 10 AUG 2009
- Article first published online: 10 AUG 2009
- Received July 20, 2006; and accepted in revised form February 25, 2009.
This paper uses a large sample of individual banking organizations, observed from 1996 to 2005, to investigate the characteristics that made them more likely to be acquired. We use a definition of acquisition that we consider preferable to that used in much of the previous literature, and we employ a competing-risk hazard model that reveals important differences that depend on the type of acquirer. Since interstate acquisitions became more numerous during this period, we also investigate differences in the determinants of acquisition between in-state and out-of-state acquirers. We also employ a subsample of publicly traded banking organizations to investigate the role of managerial ownership in explaining the likelihood of acquisition. The hypothesis that acquisitions serve to transfer resources from less efficient to more efficient uses receives substantial support from our results, as do a number of other relevant hypotheses.