The wealth effect of forced bank mergers and cronyism |
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| Institution: | 1. Accounting Department, Kozminski University, Jagiellonska Street 57/59, 03-301 Warsaw, Poland;2. Department of Banking and Insurance, Kozminski University, Jagiellonska Street 57/59, 03-301 Warsaw, Poland;1. Institute of Business Research and CFVG Ho Chi Minh City, University of Economics Ho Chi Minh City, 59C Nguyen Dinh Chieu Street, District 3, Ho Chi Minh City, Vietnam;2. Banking Academy of Vietnam, 12 Chua Boc Street, Dong Da District, Ha Noi, Vietnam;3. University of St Andrews, St Andrews, UK |
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| Abstract: | This study examines the impact of forced bank mergers on the shareholders’ wealth of Malaysian banks. Forced bank mergers, which are the result of direct government intervention in the consolidation of the banking industry, are generally rare. Unlike the findings on voluntary mergers and acquisitions, our study shows that the forced merger scheme destroys economic value in aggregate and the acquiring banks tend to gain at the expense of the target banks. Further analysis shows that the contrasting forced merger finding is linked to cronyism. |
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