M&A in The Banking Sector: Measuring the Effects on Acquiring Banks

Abstract

In this paper, we examine the impact of M&A on the acquiring bank in the banking industry in the period of 2005-2015. Through an OLS regression model, I look to analyze the impact of M&A on the acquiring bank through the analysis of various financial accounting ratios. By analyzing the two years preceding the merger and the two years following the merger, I examine the efficacy of bank acquisitions in the given time frame. The results showed that M&A had negative effects on profitability of acquiring banks, while decreasing leverage ratios of the acquiring bank.