The identification of acquisition targets in the EU banking industry: An application of multicriteria approaches

Pasiouras, Fotios; Tanna, Sailesh; Zopounidis, Constantin

doi:10.1016/j.irfa.2006.09.001

Cited by 50 publications

(41 citation statements)

References 64 publications

(83 reference statements)

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“…Studies of European bank mergers also find that poorly performing banks are more likely to be acquired. Beitel et al (2004) and Pasiouras et al (2007) showed that targets are less cost-or profit-efficient than acquirers on average. Focarelli et al (2002) found that the targeted banks in Italian bank acquisitions have relatively poor credit management, and that the M&As tend to result in improved credit allocation and loan portfolio quality.…”

Section: Geographic Diversificationmentioning

confidence: 99%

Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature

2009

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Section: Geographic Diversificationmentioning

confidence: 99%

Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature

2009

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“…Yet, there is no general agreement in the models as for the importance of the criteria. While there is no particular reason for that, such differences have been observed in past studies as well (e.g., [1,19,28]). One possible explanation is that although all methods attempt to classify correctly as many observations as possible, they consider different ways of processing the same information in the dataset.…”

Section: Resultsmentioning

confidence: 73%

“…It should also be noted, while the weights in the value functions developed with UTADIS and MHDIS represent tradeoffs, the weights in ELECTRE TRI represented the strength of the criteria in a weighted voted process. As discussed in [28], whether the weights attributed by one method are intuitively more appealing than those selected by another method is a matter of subjective judgment. Table 5 presents the average classification results obtained over the ten replications.…”

Section: Resultsmentioning

confidence: 99%

Modelling banking sector stability with multicriteria approaches

et al. 2010

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Banking crises can be damaging for the economy, and as the recent experience has shown, nowadays they can spread rapidly across the globe with contagious effects. Therefore, the assessment of the stability of a county's banking sector is important for regulators, depositors, investors and the general public. In the present study, we propose the development of classification models that assign the banking sectors of various countries in three classes, labelled "low stability", "medium stability", and "high stability". The models are developed using three multicriteria decision aid techniques, which are well-suited to ordinal classification problems. We use a sample of 114 banking sectors (i.e., countries), and a set of criteria that includes indicators of the macroeconomic, institutional and regulatory environment, as well as basic characteristics of the banking and financial sector. The models are developed and tested using a tenfold cross-validation approach and they are benchmarked against models developed with discriminant analysis and logistic regression.

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“…Furthermore, the nature of the banking activity and the regulatory environment in which banks operate require a distinction at the level of the measure of variables. Pasiouras et al (2007a) develop a multi-criteria model of classification to identify the targets in European banking M&As. They find that the target banks are usually small in size and the transaction cost of the M&As operation is relatively low.…”

Section: Review Of Previous Studiesmentioning

confidence: 99%

“…Studies within this framework are, however, rare. Indeed, Pasiouras et al (2007a) noted only about thirty studies exploring the problem of the identification of M&A targets. However, a part of this work has tried to integrate the cross border dimension of M&As.…”

Section: Introductionmentioning

confidence: 99%

How to identify targets in the M&A banking operations? Case of cross-border strategies in Europe by line of activity

Slama

Saïdane

Fedhila

2011

Rev Quant Finan Acc

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During the last decades, the European banking system has known some deep changes. They have led to mergers and acquisitions (M&As). The available studies show that the failure rate of theses M&As is relatively high. Cross-border operations are more exposed to this risk. The high failure rate is due to the cultural and contextual differences between the M&A participants, differences which make the process of integration particularly difficult. Thus, the success of M&As depends on the choice of adequate M&A targets. This choice constitutes the main challenge for company leadership. The aim of this paper is therefore to determine the factors which permit to identify the M&A targets. Our contribution compared to that of previous research is that we study M&As and the identification of targets by line of bank activities. On the basis of a sample made up of 1071 European banks, between 2000 and 2006, we use a Logit Multinomial Model. Our main results show that the target banks tend to be specialized in investment and market activities while the acquiring banks tend to approach themselves to the universal bank model.

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The identification of acquisition targets in the EU banking industry: An application of multicriteria approaches

Cited by 50 publications

References 64 publications

Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature

Mergers and Acquisitions of Financial Institutions: A Review of the Post-2000 Literature

Modelling banking sector stability with multicriteria approaches

How to identify targets in the M&A banking operations? Case of cross-border strategies in Europe by line of activity

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