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The purpose of this paper is to analyze the short‐ and long‐term wealth effects of domestic and cross‐border acquisition announcements of banks in Latin American.

This study uses the event study methodology to investigate the short‐term wealth effects of 94 bidding and 24 target banks between 1995 and 2011. Additionally, a buy‐and‐hold abnormal return analysis of 91 acquiring institutions is conducted to study the long‐term wealth effects and a cross‐sectional regression analysis identifies some key drivers of successful M&As.

This paper provides evidence of significant positive stock market reactions for bidders and targets. These results may indicate that in contrast to prior empirical findings in less dynamic banking markets, Latin America is still a region of attractive consolidation conditions.

Since data was not available for all Latin America countries, the results may lack generalizability. Therefore, researchers are encouraged to use an expanded data set to further test the empirical results of this paper.

Especially in light of the positive long‐term stock performance, bank mergers and acquisitions in Latin America should not simply be seen as a short‐term investment but rather as a long‐term commitment.

To the best knowledge of the authors, this is the first paper to provide an integrated analysis of the short‐ and long‐term wealth effects of bank M&As in Latin America.

This study aims to analyze the impact and effectiveness of the regulation on the European sovereign Credit Default Swap (CDS) market. The European sovereign debt crisis has drawn considerable attention to the CDS market. CDS have the ability of a speculative instrument to bet against a sovereign default. Therefore, the Regulation (EU) No. 236/2012 was introduced as the worldwide first uncovered CDS regulation. It prohibits buying uncovered sovereign CDS contracts in the European Union (EU).

First, this paper measures spread changes of sovereign CDS of the EU member states around regulation specific event dates to detect whether and when European sovereign CDS reacts to regulation announcements and the enforcement of regulation. Second, it compares the CDS long-term stability of the EU sample with a non-EU sample based on 44 non-EU sovereign CDS entities.

The results indicate widening CDS spreads prior to the regulation, and stable CDS spreads following the introduction of the regulation. In particular, sovereign CDS of European crisis-hit entities are stable since the regulation was introduced.

The results show that since the regulation of uncovered CDS in the EU has been enacted, the sovereign CDS market is stable and less volatile. Based on the theory about speculation on uncovered sovereign CDS by betting on the reference entity’s default, the introduction of Regulation (EU) No. 236/2012 appears to be an appropriate measure to stabilize markets and reduce speculation on sovereign defaults.