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The impact of M&As on bank risk in Spain (1986-2007)

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Issue Date
Nov-2013
Physical description
13 p.
Abstract
Our article presents the short term changes in bank risk profiles before and after domestic banks M&As that took place before the present crisis (1986-2007) based on different exante and ex-post measures of risk. Our results control for potential selection bias and show that, for acquiring banks, size and capitalization are important drivers of risk changes before and after M&As. For target banks, we find that target banks that received financial support from the government in the context of M&As showed a statistically significant increase in risk-taking immediately before but not after a deal compared to all other banks. Overall, our results indicate that bank size, leverage and government support have not caused banks to engage in additional risk-taking via M&As. However, changes to banks’ funding and income mix are linked to higher risk-taking. Our results therefore emphasize the need for increased supervisory scrutiny of the sources of bank funding and income of merging banks.
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Artículo de revista
Publish on
Estabilidad financiera. Nº 25 (noviembre 2013), p. 49-61
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