Evaluation of the Efficiency Factors of Mergers and Acquisitions in Banking Industry

This master's thesis studies the determinants of short-term effectiveness of mergers and acquisitions (M&A) in the banking industry. As a tool for analyzing the effectiveness of transactions we apply the event study approach, which is based on the calculation of abnormal stock returns in the period before and after the analyzed event. To identify the efficiency factors of deals, a linear regression model was used, where the cumulative abnormal returns (CAR) of the buyer company act as a dependent variable, and the characteristics of the transaction and the participating companies act as regressors. The paper analyzes 1,093 transactions of banks from both developed and developing countries in 2015-2019. It was revealed that the market as a whole reacts positively to the announcement of the M&A deal, and abnormal returns are influenced by factors such as the size of the deal, product and geographical diversification, method of financing, acquisition experience of the buyer and market concentration.