Bank Networks and Acquisitions

Does the predeal geographic overlap of the branches of two banks affect the probability that they merge, postannouncement stock returns, and postmerger performance? We compile information on U.S. bank acquisitions from 1984 through 2016, construct several measures of network overlap, and design and implement a new identification strategy. We find that greater predeal network overlap (1) increases the likelihood that two banks merge; (2) boosts the cumulative abnormal returns of the acquirer, target, and combined banks; and (3) reduces employment, boosts revenues, reduces the number of branches, improves loan quality, and expedites executive turnover. This paper was accepted by Tomasz Piskorski, finance.

• 저널Management Science · 66(11) · 5216–5241
• 토픽Banking stability, regulation, efficiency · Finance
• DOI10.1287/mnsc.2019.3428
• 저자Ross Levine, Chen-Ta Lin, Zigan Wang