Abstract
The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007–2008 financial crisis on cross‐border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging‐market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000–2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging‐market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets. © 2015 Wiley Periodicals, Inc.
Highlights
The global banking industry has seen dramatic changes in the last 40 years: regulation, deregulation, globalization, consolidation, privatization and financial crises
Our hypotheses are based on the literature looking at the impact of previous crises on banking concentration and mergers and acquisitions (M&As) activity, which we review in Appendix B
In this paper, we investigate the impact of the 2007-2008 financial crisis on M&As in the banking sector and emphasize the role of emerging-market banks in the post-crisis consolidation trend
Summary
The global banking industry has seen dramatic changes in the last 40 years: regulation, deregulation, globalization, consolidation, privatization and financial crises. As a matter of fact, many countries have liberalized their banking industry since the 1980s, and increased international competition has led to a global banking market where domestic banks compete with financial institutions around the world. Appendix A offers a review of the deregulation process that happened in the 1980s and 1990s in various banking systems across the globe. Such large-scale deregulation encouraged excessive risk-taking by banks and unsustainable levels of financial leverage, increasing financial market complexity and opaqueness, leading to the collapse of the financial system and a global banking crisis (Crotty, 2009)
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