The Long-Run Performance of Asian Commercial Bank Mergers and Acquisition

Sue-Fung Wang,Yi-Cheng Shih,Pei-Lung Lin

doi:10.4236/me.2014.54034

Abstract

In this paper, we investigate the long-run post-merger performance of Asian acquiring bank by using 293 deals in the 1997-2007 periods. We find the Asian acquiring banks experience negative long-term abnormal returns and are not efficiency improving, followed by mergers and acquisition. However, DeYoung, Evanoff and Molyneux [1] find European bank mergers appear to have resulted in both efficiency gains and stockholder value enhancement and North American bank mergers are efficiency improving, although the event-study literature presents a mixed picture regarding stockholder wealth creation. Therefore, our empirical results show that the long-run stock returns and operating performance of Asian commercial bank mergers are different from those of the US and EU markets. In general, the long-run stock performance and operating performance of Asian commercial bank merger and Acquisition are negative and Asian commercial bank merger and Acquisition cannot create synergy in the long run.

Highlights

In the last two decades, the merger activities in banking industry had been a major progress
As expected in model 1, while the result indicates that the frequency of mergers and relative ratio of the acquirer do not play a major role in influencing post-merger performance and domestic merger have a significant effect in the long run
Local bank regulators forced domestic banks to merge as a way to reduce bank failure risk (Shih [4]). It seemed that the domestic bank merger which is passive and forcing transactions have a negative effect on the long-run performance

Summary

Introduction

In the last two decades, the merger activities in banking industry had been a major progress. The reasons for the trend of the consolidation in most countries were financial deregulation, globalization of real and financial mar-. (2014) The Long-Run Performance of Asian Commercial Bank Mergers and Acquisition. Since the long-standing geographical restrictions of banking were revoked in the US in 1994 (Riegle-Neal Interstate Banking and Branch Efficiency), bank merger activities were popular within the banking industry. Europe caught up this trend due to the globalization and borderless economy. Bank merger activities became a global and borderless activity

Methods

Results

Conclusion