Cost Efficiencies from Commercial Bank Mergers and Acquisitions : A Look at Operating Performance & Marketing Reactions
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Merger announcements between commercial banks have become commonplace in the news. Because of drastic deregulation, bank managers are trying to take advantage of the proposed economies of scale in banking. Research conducted suggests that only small institutions have benefited from these cost savings, so why the rush to consolidate? This study looks at bank mergers using the two most widely used methods, operating performance and event study methodology. Small efficiency gains from mergers were found, but it is unable to explain why the gains occurred.