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The Handbook of Mergers and Acquisitions$
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David Faulkner, Satu Teerikangas, and Richard J. Joseph

Print publication date: 2012

Print ISBN-13: 9780199601462

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199601462.001.0001

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Financial Mergers and Acquisitions

Financial Mergers and Acquisitions

From Regulation to Strategic Repositioning to Geo-economics

(p.566) Chapter 23 Financial Mergers and Acquisitions
The Handbook of Mergers and Acquisitions

Gary A. Dymski

Oxford University Press

This chapter reviews the trajectory of financial mergers and acquisitions (M&As) in the past half-century. Shifting logics have guided both banking firms’ decisions to merge and analysts’ assessments of the benefits and costs of increased financial concentration. Until the 1980s, M&As were evaluated by comparing the increased operating gains for merging firms with customers’ losses from increased monopoly in pricing. But concerns about monopoly power were set aside amidst a global shift toward financial deregulation. By the early 2000s, many researchers concluded that more concentration leads to more stability; therefore, large diversified megabanks were to be encouraged. However, many large megabanks became insolvent in 2008 and 2009. Bailouts by central banks avoided the collapse of most megabanks; but bailouts achieved market stability only by turning “too big to fail” into government policy. Analysts and regulators have consequently become more skeptical of the benefits of bank concentration.

Keywords:   financial concentration, banking strategy, financial M&As, megabanks

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