Bank Mergers Research Articles

Welfare analysis of bank mergers with financial instability

AbstractIn this study, we analyze the effect of a merger between banks by extending a structural model of the banking industry with the possibility of bank runs developed by Egan et al. (2017; American Economic Review, 107, 169–216). We use our framework to analyze whether the 2008 merger between Wells Fargo and Wachovia was beneficial for social welfare. The results suggest that the stability of the financial system is critical for evaluating mergers in the banking industry.

Merger Induced Volatility changes: Evidence from the Indian Banking Sector

Indian Banking Sector is undergoing stress lately, with shortfalls in capital adequacy ratios and a steep rise in stressed assets. This led to mergers of various banks, either through private interventions or government interventions. This research aims to study the effect of these mergers on the volatilities of the acquiring firms. This study is essential as volatility affects valuation. The study aims to use panel data with 4 mergers. The study uses DCC-GARCH and modifications of GJR-GARCH to assess the volatility changes pre and post the merger. Cross-sectional techniques of abnormal volatilities show a significant increase in post-merger returns as compared to pre-merger returns.

Impact of Merger on Efficiency, Stability, and Competitiveness of Public Sector Banks

This study examined whether the bank’s merger enhances competitiveness, stability, and an efficient banking system. Further, this paper examined the relationship between High-Powered Money and the six mentioned explanatory variables with the help of the Panel Data Model. We used the Reserve Bank of India dataset from 2009 to 2021 to explore the relationship. We observed that High-Powered Money has increased, and the closing balance of non-performing assets has decreased after the merger of the Indian banks. In addition, we have seen that high powered money has a positive and significant relationship with the capital-to-risk-weighted assets ratio and is negatively related to the Credit-Deposit Ratio and the Investment-Deposit Ratio. In addition, we observed that return on investments is positively associated with high powered money. These estimates show that Indian public sector banks have become competitive, financially stable, and efficient after the merger of banks. At the same time, we did not see a significant relationship between the return on investments and the Total Assets to Total Income Ratio.

The role of inside debt in banks’ M&A choices: wealth expropriation or conflict resolution?

PurposeThis study investigates the impact of bank CEOs’ inside debt on shareholder benefits in the context of bank mergers and acquisitions (M&A) before the 2008–2009 financial crisis.Design/methodology/approachEmploying an event-study methodology, this analysis delves into market reactions to bank M&A announcements during 2006–2007, encompassing 105 M&As by 79 public commercial banks. This era witnessed heightened risk-taking behavior on the verge of the financial crisis. We explore the relation between relative inside debt and market abnormal returns at M&A announcements and the association between relative inside debt and cash payment preferences in M&As.FindingsEvidence suggests that M&A announcements from banks where acquiring CEOs hold a substantial inside debt experience favorable stock market reaction, particularly for smaller banks. Additionally, banks with elevated CEO inside debt tend to favor cash as a payment mode for M&As.Research limitations/implicationsOne limitation of this study is the short period of data availability. The data used in this study covers only 2006 and 2007, the periods marked by notable risk-taking activities on the verge of the financial crisis. Although this period is perfectly suitable for our investigation, given the prevalence of conflicts between equity and debt holders, it is essential to acknowledge that our findings may not capture changes or trends over time. Nevertheless, the results offer valuable insights into the factors that influence the behavior of the studied population. Future research could employ a longitudinal design to address this limitation and gain a more comprehensive understanding of the dynamics over extended periods.Practical implicationsOur study has significant implications for businesses and policymakers as it provides insights into the factors contributing to financial crises and how compensation mechanisms can be used to moderate bank risk-taking. We propose that CEO inside debt compensation presents a plausible mechanism that boards of directors can incorporate into bank executive compensation contracts. By doing so, they can promote value-enhancing investments and moderate excessive risk-taking, thereby safeguarding the financial stability of individual banks and overall financial system.Originality/valueOur study sheds light on the beneficial role of bank CEO inside debt for shareholders, contributing empirical backing to the conflict resolution viewpoint in the discourse on wealth appropriation. From a regulatory stance, our findings advocate for the inclusion of bank CEO inside debt in executive remuneration agreements. Such a strategy can empower boards of directors to mitigate undue risk and enhance shareholder value in M&As, safeguarding both individual bank and broader financial system stability.

Risk Assessment of the Banking Industry under the COVID-19 Crisis

This paper shows that increased bank asset liquidity does not necessarily reduce risk-taking. The help provided by the government in the epidemic crisis has also been provided after the damage occurred. On the other hand, the merger of banks is not a good thing for low-risk banks. Regulators should conduct frequent financial reports on banks to ensure that the risk of sudden default due to weak supervision is reduced. Foreign exchange risk management is especially important for banks involved in cross-border transactions and foreign exchange business. Reasonable control of the market exchange rate prohibits the impact of the foreign exchange black market on the market. The COVID-19 epidemic has led to fluctuations and instability in global exchange rates and the banking industry. For the foreign exchange transaction risks caused by exchange rate fluctuations, banks usually need various foreign exchange derivatives instruments to ensure that foreign exchange risks are effectively managed.

Short- and long-term impacts of merger activities in the banking industry: evidence from an emerging market

PurposeThis study aims to examine in depth the impact of merger activities on banks in Saudi Arabia.Design/methodology/approachEvent study, financial ratio and efficient frontier analyses with a mixture of parametric and non-parametric tests are used for the sample period 2016Q1–2022Q4.FindingsEvent study analysis shows that merging banks (bidders) have higher positive cumulative abnormal returns than merged banks (targets), indicating that investors believe that bidding banks will benefit the most from the merger strategy. It was also found that the efficiency measures of the combined banks of Saudi British Bank and Alawwal Bank deteriorated, while they improved for the combined banks of National Commercial Bank and Saudi American Bank in the post-merger period, confirming investors' views.Research limitations/implicationsAlthough the study focuses on the Saudi banking sector, its findings could be generalized to other banks in the region, as the Saudi banking sector is one of the largest in the Middle East region and is expected to grow further in the future.Practical implicationsThe mere act of merging two banks does not guarantee the realization of cost synergies or efficiency gains. This research shows that mergers are not automatically cost-effective and that their success depends on good integration and restructuring strategies.Originality/valueTo the best of the author's knowledge, this is the first study to provide a comprehensive analysis of the short- and long-term impacts of merger activities in the Saudi banking sector.

The Impact of Market Power, Credit Risk, and Economic Environment on the Stability of the Arab Banking Sector

The paper presents an investigation of the dialectical relationship between banking concentration and the stability of the banking sector, using data from twelve Arab countries for the period 2014-2019 in the framework of a dynamic panel data model. The findings show that the banking sector in the Arab countries follows the "Concentration-Stability" hypothesis. That is, banking concentration has a significant positive impact on bank stability. The paper explains that this result is due to two main reasons. The first reason is that large banks tend to manage their assets and capital more efficiently compared to smaller banks, while the second reason is that systemically important banks (DSIBs) are subject to additional quantitative and qualitative regulatory requirements, especially after the global financial crisis in 2008. The paper also reveals that economic growth has a significant positive effect on bank stability, while credit risk has a significant negative impact on bank stability. The paper suggests encouraging the merger of small banks, as this leads to enhancing their operational efficiency, strengthening their financial positions, and supporting their ability to absorb potential shocks.

ANALISIS KOMPARATIF PT BANK SYARIAH INDONESIA TBK. SEBELUM DAN SESUDAH MERGER

The long-term goal achieved in this study is to see the effect of the merger of BUMN Syariah Banks to become Indonesian Syariah Banks (BSI). Where is the merger will certainly affect the expansion of the market area and can increase product variations because so far each Islamic Bank has unique products that have different characteristics, so that later it will further enrich its products, can increase economies of scale or increase the size of the bank, economics of scope and course this can be realized by financing giant projects. The research method used is a descriptive method with a quantitative approach. The population of this study is PT Bank BRI Syariah Tbk, PT Bank BNI Syariah, and PT Bank Syariah Mandiri. The next step is to process the data using the SPSS 17 software using the Wilcoxon signed rank test so that a research report can be compiled as the activity output. The results of the statistical test analysis there is no significant difference in the values of KPPM, ROA, ROE, NPF, FDR, BOPO, and NOM at Bank BRIS, BNIS, and BSM before and after the Merger. The KPPM, ROA, ROE, and NOM values are negative indicating that the KPPM, ROA, ROE, and NOM values after the merger are higher than before the merger. On the other hand, the NPF, FDR, and BOPO values are positive indicating that the NPF, FDR, and BOPO values after the merger are lower than before the merger.Keywords: Comparative, Financial Ratios, Bank Mergers

MERGERS AND ACQUISITIONS. A CREDIT RISK EVALUATION IN THE GREEK BANKING INDUSTRY SHORT- AND LONG-TERM TIME PERIOD AFTER THE EVENT

<p>The Greek banking system was greatly affected by the financial crisis that began to plague Greece in 2010. Therefore, in order to have competitive Greek banks, a rally of acquisitions and mergers of Greek banks began in 2010 and ended mainly in 2015. So, in essence, the Greek economy was left with only four large Greek systemic banks, which took over the other large and small distressed Greek banks under the specter of bankruptcy. This wave of acquisitions and mergers in the Greek banking system created strength in Greek banks mainly in terms of assets and at the same time protected the interests of Greek depositors. This paper deals with the assessment and calculation of the credit risk that led to the bankruptcy of the four Greek systemically important banks with Z-Score models. These banks are Piraeus Bank, National Bank, Eurobank, and Alpha Bank. The time period for conducting our study is limited from 2015 to 2020. The year 2015 is essentially the last year in which all the important and large mergers and acquisitions of Greek systemic banks that occurred immediately after the onset of the financial crisis in Greece in the year 2010, were completed. The last year of our study is the year 2020 when the pandemic started in Greece. In our paper, extensive reference is made to the credit risk models that we apply in our study, namely the Z-Score, the Z-Score for banks, and the Zeta model. The analysis of our findings is accompanied by tables, diagrams, and comments on them. The final comparative results obtained are forecasts for imminent possible or non-bankruptcy of the Greek systemic banks we examined. At the end of our paper, we present some conclusions about the Greek banking system and its future.</p><p><strong>JEL:</strong> G21, G33, G34</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0021/a.php" alt="Hit counter" /></p>

An Analytical Study of Merger of Syndicate Bank with Canara Bank

Most companies employ mergers and acquisitions to improve and retain their market standing. The banking business in India is expanding fast now. The Indian banking sector has seen an increase in the number of mergers and acquisitions in the more recent years. This study throws some lights on the recent merger in Indian banking industries and analyses how the merger between Canara Bank and a syndicate bank affected the acquiring Bank's wealth, profitability, and overall performance after the merger was completed. Mergers and acquisitions have been a relatively recent trend in the Indian banking industry. It paves the way for banks to become industry leaders and provide exceptional returns to their investors.

Merger of Indian Banks

In this study, we look at how merging Indian public sector banks has affected their ability to work together more efficiently. The purpose of this study is to determine whether this merger would really speed up India's economic development. Bank merger advantages have been analysed using many metrics, including CASA ratio, CRAR ratio, CET I ratio, and advance and deposit size. Net nonperforming asset ratios have also been monitored in order to assess asset quality. The consolidation of 10 public sector banks into 4 is an attempt to achieve size and geographic diversity via consolidation. The merger has unquestionably enhanced the merged entity's size, which has resulted in advantages such as lower operating costs and larger money placed by a greater number of consumers. Insolvent banks have been able to strengthen their financial footing and stability as a result of mergers. Capital has been injected into struggling state-owned banks, which will increase lending and buoy the economy.

Machine learning in bank merger prediction: A text-based approach

This paper investigates the role of textual information in a U.S. bank merger prediction task. Our intuition behind this approach is that text could reduce bank opacity and allow us to understand better the strategic options of banking firms. We retrieve textual information from bank annual reports using a sample of 9,207 U.S. bank-year observations during the period 1994-2016. To predict bidders and targets, we use textual information along with financial variables as inputs to several machine learning models. We find that when we jointly use textual information and financial variables as inputs, the performance of our models is substantially improved compared to models using a single type of input. Furthermore, we find that the performance improvement due to the inclusion of text is more noticeable in predicting future bidders, a task which is less explored in the relevant literature. Therefore, our findings highlight the importance of textual information in a bank merger prediction task.

The Existence Of Bank Syariah Indonesia Post-Merger In Denpasar City

The Islamic Banking Revolution is a fairly basic change in a field of Islamic financial institutions that unites the 3 largest Islamic banks in Indonesia, namely Bank Mandiri Syariah, Bank BRI Syariah and Bank BNI Syariah which merge or merge into one called Bank Syariah Indonesia. This new breakthrough regarding the merger of state-owned banks is expected to be a breath of fresh air for all circles, especially non-Muslims to be more receptive to Islamic banking. It is certainly hoped that all Indonesian citizens regardless of their religion can accept Islamic banking as an economic system in Indonesia, especially in the city of Denpasar, which is an Islamic minority. The universal nature of Islamic banks for all people, it is necessary to expand to non-Muslim communities in order to maintain the sustainability and existence of Islamic banks.This research is a field research using qualitative research methods, while the subjects of this research are the internal parties of the Indonesian Islamic Bank in Denpasar City and the community/customers of BSI Denpasar City. Data collection techniques in this study used observation, interviews and documentation techniques. The data validation technique uses credibility test with source triangulation and dependability test.The results of this study indicate that 1) The existence of the Post-Meger Indonesian Islamic Bank in Denpasar City is still able to survive due to their strategy that covers several aspects by implementing the steps taken by Bank Syariah Indonesia in order to continue to exist and survive during the pandemic. Its existence is by implementing the Financing Relaxation program to Reduce Bad Credit Post Mergers during the pandemic, Actively sharing in Community Activities during the pandemic, Business Strategy of Bank Syariah Indonesia Post Mergers during the pandemic (both in terms of survival and marketing by targeting potential customers). 2). The public perception of Denpasar City about the existence of Bank Syariah Indonesia after the merger, both in terms of improving product quality and improving service quality, can be seen from the public perception about the merger of 3 Islamic banks (BSI) is quite good, the majority of Denpasar people already know about the merger of 3 Islamic banks. (BSI). They strongly support this merger because it makes it easier for them to deal with the bank concerned because there are more branches and the reach to the bank is getting closer, both for products and services.

Merger and Its Impact on Strengthening the Development of Sharia Banks in Indonesia

Sharia banking in Indonesia today continues to experience development in line with the increasingly advanced growth of the shari'ah economy. This is of course caused by many factors, including the existence of regulations that support the development of Islamic banking, especially related to the merger of Islamic banking. This shari'ah bank merger needs to be seen as an important part of the development of shari'ah banking in Indonesia. This paper is a type of qualitative research with the method used is the study of literature. The results of this paper reveal that the background of the merger of Islamic banks was the desire to strengthen the condition of Islamic banking in Indonesia by increasing the financial literacy of the Indonesian Muslim community. The merger of Islamic banks has had an impact on the development of Islamic banks in Indonesia, including after the merger, Bank Syariah Indonesia was able to become the 7th best national level bank; able to generate greater assets; increasing the total amount of financing, third party funds, and profits and succeeding in increasing shari'ah financial literacy in Indonesia.

OPTIMALISASI MANAJEMEN TRAFIK DAN KEAMANAN DATA PADA JARINGAN INTRANET IBI-K 1957 DENGAN METODE USER BEHAVIOUR ANALYSIS

The incident of a data breach at one of the national banks as a result of the merger of several Islamic banks in Indonesia for economic reasons has significantly increased concerns about the security of the data of all organizations, including educational organizations such as universities, where there are such as a personal data system and also educational data for the academic community, the open internet sharing systems enabled by universities are highly vulnerable to cyber attacks. For this reason, an optimization measure for the security of the campus network was implemented in this study and, in addition, the Internet connection was made more stable, as it is perceived as very slow at certain hours or during working hours. The use of Mikrotik as a network security tool designed to establish a network security fortress against intruders. In addition to the fact that Mikrotik devices are easy to obtain and inexpensive, and have good security features, the use of the method of analyzing user behavior consists in using a firewall to detect users who download activities with certain criteria are recorded and marked by the firewall , to then restrict access for the user. The. In addition to utilizing Mikrotik's firewall capabilities, the Queue feature is also used with the Simple Queue and Queue Tree methods. In the Simple Queue method, it designates one of the hosts whose bandwidth is limited, while in Queue Tree, it limits the network segments that provide users with maximum bandwidth limits and guarantees bandwidth. Both can be used side by side and work optimally.

Analisis Kebijakan Merger BSI Terhadap Industri Halal UMKM

This study examines the Indonesian Islamic Bank Merger policy towards the halal industry for micro, small and medium enterprises. This research is to find out the role of the Indonesian Islamic Bank Jambi Gatot Subroto branch office in developing the halal industry Micro, small and medium enterprises that apply for financing at the Bank after the Merger and find out what are the obstacles faced by the Indonesian Islamic Bank Jambi Gatot Subroto branch office in distributing financing contracts to Micro, small and medium enterprises after the merger. This study uses a qualitative approach and the type of research approach used is descriptive qualitative. The data sources are primary data and secondary data. Methods of data collection through interviews and documentation. The results of this study indicate that the Indonesian Islamic Bank Jambi Gatot Subroto after the merger already has a role in improving the economy and developing the halal industry Micro, small and medium enterprises in Jambi City by providing an initial injection of funds and top up or additional business capital and also lightening and facilitating Micro, small and medium enterprises in applying for financing at Bank Syariah Indonesia, not only that, Bank Syariah Indonesia also plays an active role as a consultant for its customers and often holds entrepreneurship guidance, Bank Syariah Indonesia, the Jambi branch office, Gatot Subroto, conducts canvassing every day or goes directly into the field to spread brochures as well as reducing installments when customers are affected by natural disasters. The constraints of Bank Syariah Indonesia Gatot Subroto Jambi branch office in channeling financing to the Halal Industry Micro, small and medium enterprises, namely defects in the name of the customer concerned due to late payment of bills, problems when completing administrative requirements files because if one of the requirements is not completed then the financing cannot be continued , business constraints that are already running but the customer is dishonest regarding customer financial information, accounts payable or reports about business activities that the customer is running, and constraints from the bank itself, namely when the customer data input system has an error while doing financing.

Maslahah Of Islamic Banking Merger Discourses (Indonesia Case)

The Indonesian government has merged Islamic banks in Indonesia, namely Bank Syariah Mandiri (BSM), Bank Rakyat Indonesia Syariah (BRIS), and Bank Negara Indonesia Syariah (BNIS) into Bank Syariah Indonesia (BSI) to strengthen the competitiveness of Islamic banks. Therefore, the purpose of this study is to analyze the impact of mergers of Islamic banks in Indonesia which were carried out in such a short period based on factors of employee age, employee experience, and employee productivity. The method used in this study is a quantitative method sourced from secondary data, namely the annual report. Furthermore, the formulation of the problems in this study includes: (i) Is there a gap in the age and experience of employees of each ex-legacy bank?; (ii) What were each ex-legacy bank's performance and productivity conditions before the merger?; (iii) How is the productivity of the merged bank when compared to the productivity of the ex-legacy bank?. The results of this study state that there is a potential for internal conflicts related to the staffing aspect and a decrease in productivity both in terms of profit and assets from ex-legacy banks with enormous profits and assets. Therefore, the implication of this study is to provide information to government stakeholders to take follow-up actions against the merged Islamic bank to mitigate conflicts and provide benefits or maslahah for both external and internal parties. The originality of this study is to discuss mergers of Islamic banks that are associated with staffing factors and employee productivity.

Merger Bank Syariah BUMN: Strategi Peningkatan Pangsa Pasar Keuangan Syariah

The market share of Islamic finance in Indonesia is currently still low, in stark contrast to the condition of the Muslim majority in Indonesia with the largest number in the world. As an effort to increase the market share of Islamic finance in Indonesia, the government through the Ministry of BUMN made a breakthrough by merging three state-owned Islamic banks namely BNI Syariah, BRI Syariah and Bank Syariah Mandiri into Bank Syariah Indonesia in order to expand the Islamic banking market which is the locomotive driving economic development. sharia in Indonesia. This study aims to analyze the role of the merger of state-owned Islamic banks in increasing the share of the Islamic financial market in Indonesia through a qualitative approach with a type of library research that focuses on collecting secondary data in the form of books, research results, news, magazines, journals, and other references. Based on the results of the study, the merger strategy in state-owned Islamic banks seeks to increase the share of the Islamic financial market through various advantages possessed by Bank Syariah Indonesia, among others: first, the system and work professionalism supported by the system, technological sophistication and qualified service features so as to provide various conveniences in financial transactions. Second, the amount of capital assets accompanied by various product innovations resulting in high sharia-based funding, stable liabilities and impressive profitability. Third, the superiority of local and regional understanding that is able to reach various economic sectors in society.

Analisis Profitabilitas Terhadap Bank Syariah Indonesia (BSI) Sebelum Dan Setelah Merger

The merger of Islamic Banks is to encourage larger Islamic banks to participate in the global market and to become a catalyst for Islamic economic growth in Indonesia. In addition, the merger of Islamic banks is considered more efficient in raising funds, operations and spending. Therefore, this study aims to determine the financial performance of Bank Syariah Indonesia before and after the merger. The object of this study is the financial statements of Bank Syariah Indonesia for 2018 – 2021. The method used is descriptive quantitative with the aim of analyzing BSI profitability before and after the merger. The types of data used are primary and secondary data obtained from several journals and the official website of the Indonesia Stock Exchange and the official website of Bank Syariah Indonesia (BSI). The results showed that there was no increase that was too specific between before and after the merger was carried out, where each company had its own operational and non-operational costs if the merger was not automatically carried out, so looking at the assets owned by each company, it can be said that the merger should be done. At the time the merger was carried out because the costs incurred by the company from all costs due to the implementation of the merger were more profitable than before the merger.

The Responsibility of Mudharib toward the Customer Fund of Shahibul Maal in a Financing Agreement

The Association of State-Owned Banks (Himbara) has taken over the ownership of three Islamic banks, Bank Rakyat Indonesia Syariah, Bank Syariah Mandiri, and Bank Negara Indonesia. As a result of this, the government expects Islamic finance to be more competitive in the digital age. To comply with the legislation, deposits made by customers who deposit money also go to the combined bank. According to the explanation of Article 28 of Law No. 10 of 1998 on Banking, the responsibility of the bank for customer funds in connection with a merger of banks is typically regulated. The merger carried out by the bank must not impair the interests of the customer. However, neither the Banking Law nor other pertinent laws and regulations provide additional guidance on the types of legal remedies that consumers negatively affected by this merger could use. This study aimed to ascertain the obligation of the Mudharib under the Mudharabah financing arrangement to Shahibul Maal funds following the merger into an Indonesian Sharia Commercial Bank. The results showed that the mudharib must continue the mudharabah financing agreement and continue to offer profit sharing in accordance with the terms of the shahibul maal funds in the mudharabah financing agreement following the merger into Bank Syariah Indonesia.
 Keywords: Merger, Mudharabah, Legal Protection