Journal article
Bank merger motivations: a review of the evidence and an examination of key target bank characteristics
Economic review (Atlanta, Ga.), Vol.74(5), pp.2-19
09/01/1989
Abstract
Through an examination of the banking literature, banks takeover other banks primarily to diversify their potential for growth and earnings. In other circumstances, the primary reason is to attain an economies of scale in the development of financial services. Little support was uncovered for acquisitions for the purpose of gaining market power or improving the performance of the target bank. Through a cluster analysis of a sampling of 559 target banks, the most attractive target banks had the following characteristics: 1) a high ratio of loans to earning assets; 2) an above average profitability (in terms of return on equity); 3) fast expanding total assets and core deposits; and 4) financial leverage prowess. Bank customer bases, time, and geographic subregions were found to have little affect on this profile.
Details
- Title: Subtitle
- Bank merger motivations: a review of the evidence and an examination of key target bank characteristics
- Creators
- William HunterLarry Wall
- Resource Type
- Journal article
- Publication Details
- Economic review (Atlanta, Ga.), Vol.74(5), pp.2-19
- ISSN
- 0732-1813
- eISSN
- 2163-3258
- Publisher
- Federal Reserve Bank of Atlanta
- Language
- English
- Date published
- 09/01/1989
- Academic Unit
- Finance
- Record Identifier
- 9984963236002771
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