Why are some banks recapitalized and others taken over?

Beccalli, Elena and Frantz, Pascal (2016) Why are some banks recapitalized and others taken over? Journal of International Financial Markets, Institutions and Money, 45. pp. 79-95. ISSN 1042-4431

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Abstract

This study investigates the likelihood of takeovers or recapitalizations for EU listed banks before and during the financial, using both static and sequential multinomial logistic models. Takeovers and recapitalizations are potential alternatives used to shore up financial institutions. We find that takeovers occur when the bank has low net interest margins. Instead, private recapitalizations occur for banks with lower equity, higher net interest margins, and positive growth at the bank level. Public recapitalizations occur for larger, less liquid banks with positive prospects that operate in bigger banking systems. Both types of recapitalizations occur in countries with lower growth. The determinants for takeovers and recapitalization differ between the pre-crisis and crisis periods. Overall, a need for corporate control exists when traditional banking suffers lower performance, whereas the search for stability explains recapitalizations.

Item Type:	Article
Official URL:	http://www.journals.elsevier.com/journal-of-intern...
Additional Information:	© 2016 Elsevier B.V.
Divisions:	Accounting
Subjects:	H Social Sciences > HG Finance J Political Science > JN Political institutions (Europe)
JEL classification:	G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited:	01 Aug 2016 08:37
Last Modified:	07 Feb 2024 02:00
URI:	http://eprints.lse.ac.uk/id/eprint/67305

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