FIN-02-008

The Effects of Cross-Border Bank Mergers on Bank Risk and Value

March 2002

Yakov Amihud, Gayle L. DeLong and Anthony Saunders

ABSTRACT
This paper examines the effects of cross-border bank mergers on the risk and (abnormal) returns of acquiring banks. We find that overall, the acquirers’ risk neither increases nor decreases. In particular, on average neither their total risk nor their systematic risk falls relative to banks in their home banking market. The abnormal returns to acquirers are negative and significant, but are somewhat higher when risk increases relative to banks in the acquirer’s home country.
Yakov Amihud
Institution: Stern School of Business, New York University, 44th West 4th Street, New York, NY 10012
Email: yamihud@stern.nyu.edu
Telephone: (212) 998-0720
Fax: (212) 995-4220
Homepage: http://www.stern.nyu.edu/~yamihud/

Gayle L. DeLong
Institution: Zicklin School of Business, Baruch College, One Bernard Baruch Way, Box 10-225, New York, NY 10010

Anthony Saunders
Institution: Leonard N. Stern School of Business, New York University
Telephone: 212-998-0711
Fax: 212-995-4233
Email: asaunder@stern.nyu.edu
Home Page: http://www.stern.nyu.edu/~asaunder

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