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http://hdl.handle.net/10419/19783
  
Title:The success of bank mergers revisited: an assessment based on a matching strategy PDF Logo
Authors:Heid, Frank
Behr, Andreas
Issue Date:2008
Series/Report no.:Discussion Paper, Series 2: Banking and Financial Supervision 2008,06
Abstract:The question of whether or not mergers and acquisitions have helped to enhance banks' efficiency and profitability has not yet been conclusively resolved in the literature. We argue that this is partly due to the severe methodological problems involved. In this study, we analyze the effect of German bank mergers in the period 1995-2000 on banks' profitability and cost efficiency. We suggest a new matching strategy to control for the selection effects arising from the fact that predominantly under-performing banks engage in mergers. Our results indicate a neutral effect of mergers on profitability and a positive effect on cost efficiency. Comparing our results with those obtained from a naive performance comparison of merging and non-merging banks indicates a severe negative selection bias with regard to the former.
Subjects:Bank mergers
performance measurement
propensity score matching
JEL:G34
G21
Document Type:Working Paper
Appears in Collections:Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank

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