Analysing the motives and the outcomes of bank mergers

A Awdeh, C EL-Moussawi - 2011 - mpra.ub.uni-muenchen.de
A Awdeh, C EL-Moussawi
2011mpra.ub.uni-muenchen.de
We have examined in this study the bank mergers experience in Lebanon. Between 1994
and 2002, 25 bank merger operations took place. Firstly, we have compared the
characteristics of acquiring and acquired banks, in order to identify the differences between
the two groups of banks. Secondly, we have detected the changes in performance
associated with these mergers. Our empirical results show a significant differences between
the two categories in terms of profitability (ROE and NIM), in traditional cost measures (cost …
We have examined in this study the bank mergers experience in Lebanon. Between 1994 and 2002, 25 bank merger operations took place. Firstly, we have compared the characteristics of acquiring and acquired banks, in order to identify the differences between the two groups of banks. Secondly, we have detected the changes in performance associated with these mergers. Our empirical results show a significant differences between the two categories in terms of profitability (ROE and NIM), in traditional cost measures (cost-to-income and staff expenses), in favour of acquiring banks. Besides, acquiring banks have been larger (in terms of assets), with better risk profile. However, no significant difference in productive efficiency was observed. The comparison of the performance measures of banks before and after the takeover, show a slight improvement in profitability, efficiency, with some deterioration in productive efficiency and considerable increase in credit risk.
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