Will the Proposed Application of Basel II in the United States Encourage Increased Bank Merger Activity? Evidence From Past Merger Activity
- Topics:
- Commercial Banking
- Tags:
- Bank,
- Basel II,
- Federal Reserve Board,
- Finance,
- Financial Services,
- Investment,
- Merger,
- Merger Activity,
- Mergers & Acquisitions
- Source:
- Federal Reserve Board
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Overview: This paper presents two tests of the hypothesis that adoption of the internal ratings-based approach to determining minimum capital requirements, as proposed in applying the Basel II capital accord in the United States, will cause adopting banking organizations to increase acquisition activity. The first test estimates the relationship between excess regulatory capital and subsequent merger activity, including organization and time fixed effects, while the second test employs a "difference in difference" analysis of the change in merger activity that occurred the last time regulatory capital standards were changed.
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Format: PDF | Size: 241KB | Date: Feb 2004 | Pages: 56
