The Effects of Mergers and Acquisitions on Bank Risks
type: CreativeWork
description: This thesis examines the effects of bank mergers on acquiring banks' default risk and on their contributions to systemic risk using an international merger sample, covering the period between 1998 and 2015. Furthermore, it investigates whether the changes in acquirers’ default risk after acquisitions have impacts on banking firms’ stockholders (idiosyncratic risk); or whether they spread to other banks (systemic risk) and all listed firms (systematic risk). Also, this thesis extends the established literature by providing original evidence on the determinants of these merger-related changes in acquiring banks' default risk, systemic risk, systematic risk and idiosyncratic risk of shareholders. An ongoing debate in the literature is whether or not bank mergers help to lower bidders’ default risk. Using Distance to Default methodology from Vallascas and Hagendorff (2011), this thesis brings robust evidence that bank mergers reduce the default risk of bidders. The results also show that not all forms of diversification exert an equal effect on the reduction of bidders' default risk. Product diversification is found to reduce bidding banks' default risk meanwhile geographic diversification does not have a statistically significant relationship to the reduction in default risk of acquiring banks. Additionally, this thesis extends the debate regarding the effects of bank mergers on bidders’ contribution to systemic risk. Employing Marginal Expected Shortfall from Acharya et al., (2017) and ΔCoVaR from Adrian and Brunnermeier (2016), the findings suggest that bank mergers, on average, do not impact on acquiring banks’ contribution to systemic risk. However, product-diversifying deals lead to a reduction in acquirers’ contribution to systemic risk for non-US acquirers only. It also transpires that with deals financed by cash only, the acquirers’ contribution to systemic risk increases. Finally, this thesis investigates the impact of the changes in default risk on changes in…
abstract: This thesis examines the effects of bank mergers on acquiring banks' default risk and on their contributions to systemic risk using an international merger sample, covering the period between 1998 and 2015. Furthermore, it investigates whether the changes in acquirers’ default risk after acquisitions have impacts on banking firms’ stockholders (idiosyncratic risk); or whether they spread to other banks (systemic risk) and all listed firms (systematic risk). Also, this thesis extends the established literature by providing original evidence on the determinants of these merger-related changes in acquiring banks' default risk, systemic risk, systematic risk and idiosyncratic risk of shareholders. An ongoing debate in the literature is whether or not bank mergers help to lower bidders’ default risk. Using Distance to Default methodology from Vallascas and Hagendorff (2011), this thesis brings robust evidence that bank mergers reduce the default risk of bidders. The results also show that not all forms of diversification exert an equal effect on the reduction of bidders' default risk. Product diversification is found to reduce bidding banks' default risk meanwhile geographic diversification does not have a statistically significant relationship to the reduction in default risk of acquiring banks. Additionally, this thesis extends the debate regarding the effects of bank mergers on bidders’ contribution to systemic risk. Employing Marginal Expected Shortfall from Acharya et al., (2017) and ΔCoVaR from Adrian and Brunnermeier (2016), the findings suggest that bank mergers, on average, do not impact on acquiring banks’ contribution to systemic risk. However, product-diversifying deals lead to a reduction in acquirers’ contribution to systemic risk for non-US acquirers only. It also transpires that with deals financed by cash only, the acquirers’ contribution to systemic risk increases. Finally, this thesis investigates the impact of the changes in default risk on changes in…
author: Ngo, H.
date published: 2019
date modified: 2026-07-24T06:01:40Z
provider: University of Westminster
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: University of Westminster

PropertyValue
property ID: DOI
value: 10.34737/qq3z1