Performance Changes of EU Bank M&As: Key Determinants and Relationships with Banking Market Integration

Abstract

Using the panel data of bank M&As in EU 28 countries between 1997 and 2015, this paper applies fixed-effect model and Granger-causality test to analyze the determinants of performance changes of EU bank M&As and the relationship between performance changes and banking market integration. This study finds that (1) cross-border M&As results in the decrease of acquirers’ long- and medium-term performance; (2) acquirers with higher safety, whose banking markets are less concentrated, and who only participate in domestic M&As are more likely to have higher performance in the long- and medium-term; (3) the increase of EU banking market integration leads to the increase of acquirers’ performance in the long- and medium-term.