M&A in banking

: a comparison of the determinants and post-deal performance in the US and the EU

Abstract

In this thesis I examine the determinants of Mergers and Acquisitions in the banking sector, from the perspective of acquirers and targets between 2012 and 2022. I directly compare the key intrinsic characteristics of US and EU banks, as well as country and market-specific variables and regulatory and institutional variables hindering or fostering financial consolidation between banks in these two regions. For that purpose, I use two multinomial logistic regressions, one allowing for bank-specific variables only and another one controlling for other factors. The findings suggest that there are several different characteristics between acquiring and targeted banks in the two regions, with US acquiring banks being more profitable than their EU counterparts which are constrained by factors such as liquidity. Additionally, I explore the post-M&A performance of acquiring banks in the two geographic areas, using a propensity score matching technique and a Differences-in-Differences analysis. The results suggest that, while US banks showed profitability improvements in the short-term (relative to banks with similar characteristics, but not involved in any M&A deal), the results in the EU are inconclusive with no statistical significance. These findings align with the existing literature on post-M&A performance, which is highly sensitive with the period under analysis and the region in study. My study contributes to the on-going discussion of key differences between the US and the EUwhen analysing financial consolidation.

Date of Award	6 Feb 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Diana Bonfim (Supervisor)