The effects of cross-border bank mergers on bank risk and value

This paper examines the effects of cross-border bank mergers on the risk and (abnormal) returns of acquiring banks. We find that, overall, the acquirers' risk neither increases nor decreases. In particular, on average, neither their total risk nor their systematic risk falls relative to banks in their home banking market. The abnormal returns to acquirers are negative and significant, but are somewhat higher when risk increases relative to banks in the acquirer's home country. (C) 2002 Elsevier Science Ltd. All rights reserved.