A Study of Consolidations between Banks and Non-Banks: Motivations and Consequences

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dc.contributor.authorYi, Ha Chin
dc.date.accessioned2009-08-13T10:06:37Z
dc.date.available2012-02-24T10:05:54Z
dc.date.issued2008-01
dc.descriptionResearch Enhancement Program Final Report
dc.description.abstractThis study focuses on the reasons for and the implications of banks' decisions to acquire non- bank financial service firms (non-banks). The choice to acquire non-banks is driven by both external forces such as deregulation and regulatory capital and by internal forces such as a diversification strategy and efforts to enhance revenue and return to equity holders. We find that whereas the impact of acquiring non-banks increases their non-interest income, it also increases their non-interest expense. The net effect of choosing non-bank acquisitions lowers their subsequent return on assets, market value, and stock returns, as well as increasing their risk. However, the non-bank acquisitions do significantly increase the acquiring banks top executives' subsequent compensation. We conclude that non-bank acquisitions are driven by both regulatory and strategic forces within the banking industry. However, such acquisitions manifest into agency problems.
dc.description.departmentSponsored Programs
dc.formatText
dc.format.extent1 page
dc.format.medium1 file (.pdf)
dc.identifier.citationYi, H. C. (2008). A study of consolidations between banks and non-banks: Motivations and consequences. Research Enhancement Program, Texas State University, San Marcos, TX.
dc.identifier.urihttps://hdl.handle.net/10877/2794
dc.language.isoen
dc.subjectbanks
dc.subjectfinancial service firms
dc.subjectfinancing
dc.subjectfinancial motivations
dc.titleA Study of Consolidations between Banks and Non-Banks: Motivations and Consequences
dc.typeReport

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