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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

Chapter:
(p.566) Chapter 23 Financial Mergers and Acquisitions
Source:
The Handbook of Mergers and Acquisitions
Author(s):

Gary A. Dymski

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199601462.003.0023

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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