THE IMPACT OF BANK MERGERS AND ACQUISITIONS ON THE BANK PERFORMANCE AND RISK TAKING BEHAVIOUR

This study assesses the main implications of M&As on the bank performance and risk taking behaviour using a panel dataset covering 156 banks from 17 countries of Central and Eastern Europe during the period of 2005-2012. In the latest years, the trend of completed M&As has risen significantly and is considered to be an important instrument of growth and power of the financial markets. The authors of this article found robust evidence that there is a negative impact of M&As on profitability. The M&As are drivers for credit risk reduction, as they negatively impact the lending growth. The credit risk taking is augmented in the post-merger period if the banks are state owned, have a weak mechanism of internal governance and are a part of banking system that faces supervision quality problems. The post-M&A performance is not affected by the ownership or governance, but is enhanced by a lax supervision framework.