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- Title
Big-Bank Mergers in Europe: An Analysis of the Cost Implications.
- Authors
Altunbas, Yener; Molyneux, Philip; Thornton, John
- Abstract
This article examines the cost implications from cross-border bank mergers in the European Union, in light of claims that substantial cost savings could be expected as a result of the EU's Single Market Programme for financial services. Merger simulations are carried out hypothetically, ignoring any prior information about the pairings. It is assumed that no premiums or merger costs and no further synergies result from such things as branch closures or a restructuring of the product mix. The bank mergers are simulated and the hypothetical inputs and outputs for the merged institutions are substituted back into the estimated hybrid translog cost functions, in order to predict the total costs of the hypothetically merged bank. These costs are then compared with the sum of the original predicted total costs for the two individual banks. If the predicted costs for the hypothetically merged banks are smaller than the sum of the predicted costs for the two banks when calculated separately, there is a cost saving brought about by the hypothetical merger.
- Subjects
BANK mergers; BANKING industry; MERGERS &; acquisitions; CORPORATE reorganizations; FINANCIAL institutions; PRODUCT management; PRODUCT mixes
- Publication
Economica, 1997, Vol 64, Issue 254, p317
- ISSN
0013-0427
- Publication type
Article
- DOI
10.1111/1468-0335.00080