Transformations  in
Business & Economics

THE IMPACT OF BANK MERGERS AND ACQUISITIONS ON THE BANK PERFORMANCE AND RISK TAKING BEHAVIOUR
Mircea Asandului, Sabina Andreea Cazan, Bogdan Capraru, Iulian Ihnatov

ABSTRACT. This study assesses the main implications of M&As on the bank performance and risk taking behaviour using a panel dataset covering 156 banks from 17 countries of Central and Eastern Europe during the period of 2005-2012. In the latest years, the trend of completed M&As has risen significantly and is considered to be an important instrument of growth and power of the financial markets. The authors of this article found robust evidence that there is a negative impact of M&As on profitability. The M&As are drivers for credit risk reduction, as they negatively impact the lending growth. The credit risk taking is augmented in the post-merger period if the banks are state owned, have a weak mechanism of internal governance and are a part of banking system that faces supervision quality problems. The post-M&A performance is not affected by the ownership or governance, but is enhanced by a lax supervision framework .

KEYWORDS:  mergers and acquisitions, bank performance, risk taking, crises.

JEL classification:  G21, G34.