Consolidation in the Greek banking industry: which banks are acquired?

Abstract

Purpose

The present paper aims to examine the relationship between bank's characteristics and market characteristics and the probability of acquisition in the Greek banking industry.

Design/methodology/approach

Logistic regression is used to examine a sample of 24 banks, 9 of which were acquired between 1998 and 2002.

Findings

It is found that profit and cost efficiency, liquidity and capital strength do not seem to have an impact on the acquisition likelihood. Market share in terms of deposits, the number of branches, the annual growth of bank's total assets and the size of banks are negatively related to the acquisition likelihood. From the three market characteristics that were examined, the concentration of the five largest banks, the mean return on average assets of the industry and the average total assets growth, only the first one was found to have a negative and statistically significant impact on the acquisition likelihood.

Research limitations/implications

Variables related to management incentives and corporate governance, which may have an impact on the acquisition likelihood, were not available and therefore have not been considered. It is hoped that future research will improve upon this.

Practical implications

The results could be of interest to bank managers of potential targets that would like to know whether their bank is developing a profile similar to the typical target. Furthermore, knowledge of bank's and market characteristics that increase the probability of acquisition can be of particular interest to policy makers.

Originality/value

The investigation of the characteristics that affect the likelihood that a bank will be acquired has been largely ignored with most studies in banks M&As using event study, operating performance or X‐efficiency methodology to examine the effect of M&As on the stock prices or the performance of banks. Furthermore, the limited studies that have examined the characteristics of acquired banks have focused on the US market. The present paper adds to the literature by examining the Greek banking sector, which is different from the US one in many aspects.

Citation

Pasiouras, F. and Zopounidis, C. (2008), "Consolidation in the Greek banking industry: which banks are acquired?", Managerial Finance, Vol. 34 No. 3, pp. 198-213. https://doi.org/10.1108/03074350810848072