Impact of the Financial Crisis on Banking Acquisitions: A Look at Shareholder Wealth |
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Authors: | Rekha Rao-Nicholson |
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Institution: | Bristol Business School, University of the West of England, Frenchay Campus, Coldharbour Lane, BS16 1QY, Bristol, United Kingdom |
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Abstract: | This paper examines the influence of the 2007–08 financial crisis on value creation for acquirer’s shareholders in the banking industry using a sample of 883 deals over 2004–12. Applying an exploratory and top-down approach, banking acquisitions are considered at the global level, narrowing the analysis step by step to consider domestic versus cross-border acquisitions. Then cross-border deals are split based on the economic development of the acquirer and target countries. It is observed that only acquisitions involving emerging-economy acquirers and developed-economy targets generate positive and significant returns to shareholders after the crisis. Major changes in the global acquisition landscape are also observed since 2007, with emerging-economy banks increasing their acquisition activity, both nationally and internationally. |
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Keywords: | Banking Sector Acquisitions Emerging Economies Financial Crisis Shareholder Returns |
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