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The impacts of bank mergers and acquisitions (M&As) on bank behaviour

Prompitak, Duangkamol (2010)
Ph.D. thesis, University of Birmingham.

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Abstract

This thesis examines the impact of bank mergers and acquisitions (M&As) on lending behaviour by commercial banks. We use the data set of large European commercial banks from 1997 to 2005. Empirical models are formulated to explain the effects of mergers on bank loan pricing behaviour, interest margin setting, credit availability and lending objectives. The analysis provides evidence that mergers have statistically significant influence on reduced lending rates, interest margins and loan supply. In addition, lending objectives for merged and non-merging banks are different, in that merge-involved banks tend to emphasise maximising their utility, while non-merging banks focus on remaining safe. These results suggest that merged banks can obtain efficiency gains through mergers and can pass these benefits to their customers in the form of lower lending rates and interest margins. In addition, diversification gains could arise from consolidations. This is because merged banks focus more on other business activities than traditional intermediary activities. As non-interest income increases in relation to interest income, banks can diversify their business activities and can reduce their non-interest costs. As a result, they can be exposed to lower risk and therefore be less risk averse than non-merging banks.

Type of Work:Ph.D. thesis.
Supervisor(s):Dickinson, David G. and Horsewood, N. (Nick)
School/Faculty:Colleges (2008 onwards) > College of Social Sciences
Department:Birmingham Business School, Department of Economics
Subjects:HB Economic Theory
Institution:University of Birmingham
ID Code:779
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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