Bank Consolidation and Performance: The Argentine Experience
August 1, 2004
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Summary
We examine a large panel of more than 100 banks from Argentina to study the effects of bank consolidation on performance between December 1995 and December 2000, a period of heavy bank consolidation and relative calm. Overall, we find a positive and significant effect of bank consolidation on bank performance. Bank returns increase with consolidation, and insolvency risk is reduced. Additionally, the study suggests that mergers and privatizations have a beneficial effect on bank returns. The effects of a bank acquisition on return on equity is, however, negative. Acquisitions do not seem to have any effect on risk-adjusted returns. The study also finds that a bank's insolvency risk is reduced significantly through mergers and privatization and is unrelated to bank acquisitions.
Subject: Bank solvency, Banking, Commercial banks, Foreign banks, Solvency
Keywords: bank consolidation, bank merger dummy variable, bank return, insolvency risk, performance indicator, WP
Pages:
32
Volume:
2004
DOI:
Issue:
149
Series:
Working Paper No. 2004/149
Stock No:
WPIEA1492004
ISBN:
9781451856927
ISSN:
1018-5941
