Koetter, Michael Bos, Jaap W. B. Heid, Frank Kool, Clemens J. M. Kolari, James W. Porath, Daniel
Year of Publication:
Discussion Paper, Series 2: Banking and Financial Supervision 2005,09
The inability of most bank merger studies to control for hidden bailouts may lead to biased results. In this study, we employ a unique data set of approximately 1,000 mergers to analyze the determinants of bank mergers. We use data on the regulatory intervention history to distinguish between distressed and non-distressed mergers. We find that, among merging banks, distressed banks had the worst profiles and acquirers perform somewhat better than targets. However, both distressed and non-distressed mergers have worse CAMEL profiles than our control group. In fact, non-distressed mergers may be motivated by the desire to forestall serious future financial distress and prevent regulatory intervention.