Performance Changes Around Bank Mergers: Revenue Enhancements versus Cost Reductions

Cornett, Marcia Millon; McNutt, Jamie John; Tehranian, Hassan

doi:10.1353/mcb.2006.0053

Cited by 138 publications

(103 citation statements)

References 27 publications

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“…While on other hand, another study showed performance is not positively influenced by mergers and acquisitions operations in United States banking industry in terms of efficiency (Amel, Barnes, Panetta, & Salleo, 2004). Cornett et al (2006) found that operating performance of merged banks increases appreciably (Cornett, McNutt, & Tehranian, 2006). Badreldin and Kalhoefer (2009) calculated the companies" return on equity and found the improved performance after merger in the banking sector (Badreldin & Kalhoefer, 2009).…”

Section: Merger Partmentioning

confidence: 99%

Evaluation of Pre and Post Demerger-Merger Performance: Using ABN AMRO Bank as an Example

Han¹

2017

IJEF

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This study attempts to measure the impact of simultaneously demerger and merger over the financial performance of ABN AMRO Bank for the period 2007-2013 by using the DuPont system of financial analysis. ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. The bank demerged from Royal Bank of Scotland Group (RBS) in the first quarter of 2010 and merged with Fortis Bank Nederland from July 1, 2010. Two statistical techniques are used in this study; first the analysis of pre and post Demerger-Merger financial ratios is drawn and second paired sample t-test is used. Based on the analysis of 3 years pre and post Demerger-Merger financial ratios and data of ABN AMRO Bank, the result shows that the event of merger-demerger has no significant influence on the bank"s Net profit margin, Total asset turnover, Return on equity and Equity multiplier. This research fills the gap of Demerger-Merger analysis in the bank industry by using DuPont system of financial analysis.

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Section: Merger Partmentioning

confidence: 99%

Evaluation of Pre and Post Demerger-Merger Performance: Using ABN AMRO Bank as an Example

Han¹

2017

IJEF

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“…Cornett et al [8] find that large, activity-focusing or geographic-focusing mergers during 1990-2000 produce greater performance gains compare to small or diversifying mergers, and the performance improvements are traced back to both revenue enhancements and cost reduction activities. Hagendorff and Keasy [3] find no evidence of improvements in the overall post-merger performance for mergers announced during 1996-2004, and this is consistent with their findings of revenue enhancements due to improvements in both interest and non-interest income, and efficiency deterioration due to increase costs and lower productivity.…”

Section: The Impacts Of Mandas On Us Banking Industry: a Review Of Mementioning

confidence: 99%

“…Similar to previous research, the operating cash flow returns on assets (OPCFROA) is used to examine the profitability of banks [3,8,21]. The operating cash flow is calculated using the following equation:…”

Section: Operating Performance Measuresmentioning

confidence: 99%

“…However, this may be a result of deteriorations in the performance of general banking industry, since individual bank performance can be highly correlated with other banks performance. An industry performance benchmark can be introduced to analyse the change in individual bank performance in relation to the industry performance [3,7,8,21]. This research does not introduce an industry benchmark because it aims to analyse the difference in post-merger performance for TARP recipients and nonrecipients, which is specified to the period of Financial Crisis 2007-09 and changes in regulatory environment.…”

Section: Opcfroa=(income Before Extraordinary Items [Ibcomq]+total Inmentioning

confidence: 99%

“…Although, many studies examine merger related outcomes in relation to changes in government regulatory factors, almost all overlook the impact of government assistance, i.e. FDIC assisted mergers in the US, on the changes in bank performance around mergers [7][8][9].…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Are All Bank Acquisitions Equal? The Impact of Bank Mergers and Acquisitions around the 2007-2009 Financial Crisis: Evidence from TARP

King¹,

Kong²

2016

J Account Mark

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The large wave of bank mergers, which had affected the US bank sector in the years leading 2007-2009 crisis, experienced a sudden decline in both volume and value in the post-financial crisis period. This study examines whether TARP banks, i.e. banks that received government financial support during the recent 2007-2009 crisis, differed in terms of M&A financial performance outcomes in the pre and post financial crisis periods compared to non-TARP recipients. We find significant and differences in the post-merger financial performance of TARP recipients compared to non-TARP recipients in the post financial crisis period but no significant differences in their pre-merger performance. Our results infer differences in merger motivations for TARP and non-TARP banks.

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Banking market consolidation in Asia: Evidence from acquirers, targets, and rivals

Kolaric,

Kiesel,

Schiereck

2024

Int. J Fin Econ

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We analyse the financial sector consolidation in Asia by using a comprehensive sample of bank M&As from 1995 to 2021. Our results show that M&A announcements by Asian domestic acquirers are associated with significant positive stock price returns to both acquirers and their rivals. In contrast, cross‐border acquirers and their rivals experience negative but insignificant returns, while targets and their rivals record gains, regardless whether it is a domestic or cross‐border transaction. Further analyses reveal that domestic acquirers obtaining larger relative increases in their market share benefit the most, indicating that market power considerations are the primary driver behind acquirers' positive returns. For cross‐border acquirers, neither cultural differences nor regulatory arbitrage considerations can explain return patterns surrounding M&A announcements.

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Performance Changes Around Bank Mergers: Revenue Enhancements versus Cost Reductions

Cited by 138 publications

References 27 publications

Evaluation of Pre and Post Demerger-Merger Performance: Using ABN AMRO Bank as an Example

Evaluation of Pre and Post Demerger-Merger Performance: Using ABN AMRO Bank as an Example

Are All Bank Acquisitions Equal? The Impact of Bank Mergers and Acquisitions around the 2007-2009 Financial Crisis: Evidence from TARP

Banking market consolidation in Asia: Evidence from acquirers, targets, and rivals

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