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  • Thumbnail for The economic efficacy of the banking merger wave : 2006-2008
    The economic efficacy of the banking merger wave : 2006-2008 by Vitale, Rachel

    The most recent financial crisis has spurred a number of mergers and acquisitions in the financial industry, specifically banks. This study examines the hypothesis that mergers and acquisitions did not produce better performing institutions and industries during the 2006-2008 period. The key theories behind this hypothesis are valuation theory and performance measurement theory. Data were compiled for six banking ratios for 105 firms directly involved in mergers or acquisitions during this period. An empirical test of firm-to-firm performance shows that firms did not benefit from the mergers for the majority of ratios tested. On the other hand, firm to industry performance shows mixed results, with many of the ratios tested resulting to be statistically insignificant. These results reveal the inefficiencies of mergers and acquisitions and support the hypothesis of this study.