Mergers and acquisitions bank strategy against systematic risk before the COVID-19 pandemic

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Abstract

This study examines the relationship between the reduction of systematic risk and mergers and acquisitions (M&As) only in the Greek banking system. We have to mention that Adam et al. (2012) analyzed and estimated the time-varying betas of the banking sectors in eight advanced markets but they did not find strong evidence of declining systematic risk before the recent financial and sovereign crises, in contrast to our own work which deals with the systematic risk of banks in emerging economies. This research aims to investigate if the Greek systemic banks reduced the systematic risk after the main wave of M&As that started and completed soon after the international financial crisis of 2009, but before the new financial crisis that the COVID-19 pandemic brought in Greece. The purpose of this monograph was to examine the impact of systematic risk (Beta b) from those M&As. Our findings were extracted from multiple linear regressions using the capital asset pricing model (CAPM) and showed that the reduction of systematic risk succeeded after M&As that took place in the Greek banking industry after the international financial crises but before the COVID-19 pandemic. For this reason, maybe in some other economies mainly in Europe, the banks would follow the same strategy of M&As to reduce their systematic risk.

Keywords: Banks, Mergers and Acquisitions, Information and Market Efficiency, Financial Crises

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G01, G14, G21, G34

Received: 14.01.2024
Accepted: 29.04.2024
Published online: 01.05.2024

How to cite this paper: Kyriazopoulos, G. (2024). Mergers and acquisitions bank strategy against systematic risk before the COVID-19 pandemic. Corporate & Business Strategy Review, 5(2), 163–174. https://doi.org/10.22495/cbsrv5i2art14