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, 2019
Posted: 19 Apr 2019
Date Written: March 29, 2019
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
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