Too big to merge? Evidence from the US banking sector

Abstract

This article tries to cast light on the main determinants of the merger waves reported in the banking sector. For this reason, we investigate the recently developed merger wave theories by estimating an empirical model covering the US for the period 1987 to 2013. The empirical results, based on four alternative methodologies, are robust, claiming that merger waves in the banking sector are driven by stock market booms, a finding that is consistent with the behavioural hypothesis about the causes of merger waves.

Keywords:

• merger waves
• banking sector
• merger theories
• US

JEL Classification:

• L10
• C50
• C52

Notes

¹ See Gugler et al. (2012) for more details.