Chapter

Financial Mergers and Acquisitions

Gary A. Dymski

in The Handbook of Mergers and Acquisitions

Published in print June 2012 | ISBN: 9780199601462
Published online September 2012 | e-ISBN: 9780191743320 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199601462.003.0023
Financial Mergers and Acquisitions

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This chapter reviews the trajectory of financial mergers and acquisitions (M&As) in the past half-century. Shifting logics have guided both banking firms’ decisions to merge and analysts’ assessments of the benefits and costs of increased financial concentration. Until the 1980s, M&As were evaluated by comparing the increased operating gains for merging firms with customers’ losses from increased monopoly in pricing. But concerns about monopoly power were set aside amidst a global shift toward financial deregulation. By the early 2000s, many researchers concluded that more concentration leads to more stability; therefore, large diversified megabanks were to be encouraged. However, many large megabanks became insolvent in 2008 and 2009. Bailouts by central banks avoided the collapse of most megabanks; but bailouts achieved market stability only by turning “too big to fail” into government policy. Analysts and regulators have consequently become more skeptical of the benefits of bank concentration.

Keywords: financial concentration; banking strategy; financial M&As; megabanks

Chapter.  11732 words.  Illustrated.

Subjects: Financial Institutions and Services

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