In the following thesis I examine the performance effects of merger within the German cooperative banking sector on the basis of agency, synergy and market power related changes. Furthermore, from a strategic management perspective the role of strategic similarities is analyzed. Performance enhancing effects are found from a synergy and market power theory perspective in terms of a reduction in interest costs. Furthermore, problems with synergy gains in the area of personnel costs are discovered. These are so serious that they have hampered a significant change in overall bank performance. A change in market power is also measured in terms of a significant increase in other operating income. It is not possible to detect any significant change in agency related costs. Further, I describe that strategic similarities and size differences are not leading to increased profitability. Instead, differences in diversity of earnings are found to be performance enhancing. Therefore, the previously described increase in other operating income can also be facilitated by economies of scope: services that are originally only provided to the customers of one bank are in the post-merger period provided to the united institute’s combined customer base.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Literature Review
- Theory of M&A Performance Changes and Strategic Similarities
- The Agency Theory
- The Synergy Theory
- The Market Power Theory
- The Concept of Strategic Similarities
- Summary of the Theoretical Concepts
- Empirical Evidence
- The Agency Theory: Empirical Evidence
- The Synergy Theory: Empirical Evidence
- The Market Power Theory: Empirical Evidence
- The Concept of Strategic Similarities: Empirical Evidence
- Summary of the Empirical Evidence
- The German Cooperative Banking Sector
- Summary
- Theory of M&A Performance Changes and Strategic Similarities
- Hypotheses
- Hypotheses Development
- Summary
- Methodology and Data
- Methodology
- Data
- Summary
- Empirical Results
- Empirical Results (H1 - H3)
- Empirical Results (H4)
- Summary
- Remarks
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis examines the performance effects of mergers within the German Cooperative Banking Sector. It aims to analyze how mergers impact financial performance, taking into account the specific dynamics of this sector. The key themes explored in the thesis include:- Theories of merger performance changes, such as agency theory, synergy theory, and market power theory.
- The concept of strategic similarities and its relevance to merger success.
- Empirical evidence on merger performance in various contexts, including the German Cooperative Banking Sector.
- The development and testing of hypotheses regarding merger effects on financial performance.
- A detailed analysis of the German Cooperative Banking Sector and its specific characteristics.
Zusammenfassung der Kapitel (Chapter Summaries)
The introduction lays the foundation for the study, presenting the research problem and its significance. It also outlines the structure of the thesis and provides a brief overview of the key themes. The literature review section delves into the existing theoretical and empirical research on merger performance. This section examines various theories, including agency theory, synergy theory, and market power theory, and explores their implications for merger outcomes. It also presents a detailed analysis of empirical evidence from previous studies, focusing on the factors that influence merger success or failure. The section on the German Cooperative Banking Sector provides a comprehensive overview of its structure, key characteristics, and recent developments. It also highlights the specific challenges and opportunities faced by banks in this sector, setting the stage for the analysis of merger effects.Schlüsselwörter (Keywords)
The main keywords of the thesis are: mergers and acquisitions, financial performance, cooperative banking sector, agency theory, synergy theory, market power theory, strategic similarities, empirical evidence, German banking system, and financial performance analysis. This research focuses on the impact of mergers on the financial performance of German cooperative banks, drawing on existing theories and conducting empirical analysis.Frequently Asked Questions
How do mergers affect performance in the German cooperative banking sector?
Performance effects are observed primarily through synergy and market power gains, such as reduced interest costs and increased operating income. However, high personnel costs often hamper significant improvements in overall bank performance.
What role does Market Power Theory play in bank mergers?
Market Power Theory suggests that mergers can lead to increased profitability by allowing the combined entity to charge higher fees or reduce costs; this study measured it via a significant increase in other operating income.
Do strategic similarities guarantee merger success?
No, the research suggests that strategic similarities and size differences do not necessarily lead to increased profitability. Instead, differences in diversity of earnings were found to be more performance-enhancing.
What is the impact of "economies of scope" after a merger?
Economies of scope allow services originally provided by only one bank to be offered to the combined customer base of the post-merger institute, facilitating an increase in operating income.
Why are personnel costs a problem in cooperative bank mergers?
The study discovered serious problems with realizing synergy gains in the area of personnel, which often remain high enough to offset other financial gains from the merger.
- Quote paper
- Timo Göhlich (Author), 2012, The Performance Effects of Mergers within the German Cooperative Banking Sector, Munich, GRIN Verlag, https://www.grin.com/document/204026
