The impact of cross-border acquisitions on target banks’ performance in an institutionally poor environment: Ukraine’s takeover wave

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Leo Van Hove

Abstract

We investigate the impact of the 2005–2007 cross-border bank takeovers in Ukraine – a country with poor institutional quality – on the performance of the target banks. Because acquirers targeted mainly larger, less-capitalised banks, we control for selection bias by combining propensity score matching and a difference-in-difference methodology. We find that the cost efficiency of the acquired banks improved after takeover (because of a decreased reliance on deposits), but that neither their profitability nor their loan market shares increased. Overall, our findings tally only piecemeal with the existing multi-country studies for transition economies. This argues in favour of additional single-country research.

KEYWORDS: Cross-border takeovers, bank performance, weak institutions, selection bias

Ahunov, M., Van Hove, L. and M. Jegers, The impact of cross-border acquisitions on target banks’ performance in an institutionally poor environment: Ukraine’s takeover wave, Post-Communist Economies, Vol. 31, Nr. 3, 396-417

https://doi.org/10.1080/14631377.2018.1537739