Global patterns of mergers and acquisition activity in the financial service industry

  • Roy C. Smith
  • Ingo Walter
Part of the The New York University Salomon Center Series on Financial Markets and Institutions book series (SALO, volume 3)


This paper analyzes empirical evidence regarding mergers and acquisitions in the global financial services industry. It examines the global deal-flow during the eleven-year period 1985–95 and generates a global typology of intra- and intersectoral M&A transactions among and between banks, insurance companies and securities firms. From these data it identifies financial services as one of the most active industries involved in the global M&A deal-flow. It also identifies the areas of greatest M&A intensity within the world financial services industry. The paper then assesses the motivations for financial services M&A transactions in the context of changed regulatory and competitive factors and evolution in management objectives emphasizing the pursuit of greater operating efficiencies, enhanced economies of scale and scope and greater market power which executives and boards of directors believe has led (or will lead) to increased shareholder value and competitive performance.


Financial Service Large Bank Scope Economy Acquisition Activity Financial Service Industry 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Benston, George, “Universal Banking,” Journal of Economic Perspectives, Volume 8, Number 3, Summer 1994.Google Scholar
  2. Benston, George, G. Hanweck and D. Humphrey, “Scale Economies in Banking,” Journal of Money, Credit and Banking, 14, 1982.Google Scholar
  3. Berger, Allen N., Diana Hancock and David B. Humphrey, “Bank Efficiency Derived from the Profit Function,” Journal of Banking and Finance, April 1993.Google Scholar
  4. Berger, Allen N., G. Hanweck, and D. Humphrey, “Competitive Viability in Banking,” Journal of Monetary Economics, 20, 1987.Google Scholar
  5. Berger, Allen N., William C. Hunter and Stephen J. Timme, “The Efficiency of Financial Institutions: A Review of Research Past, Present and Future,” Journal of Banking and Finance, April 1993.Google Scholar
  6. Clark, Jeffrey A., “Economies of Scale and Scope at Depository Financial Institutions: a Review of the Literature,” Federal Reserve Board of Kansas City Review, October 1988.Google Scholar
  7. Fields, Joseph A. and Neil B. Murphy, “An Analysis of Efficiency in the Delivery of Financial Services: The Case of Life Insurance Agencies,” Journal of Financial Services Research, 2, 1989.Google Scholar
  8. Gilligan, Thomas and Michael Smirlock, “An Empirical Study of Joint Production and Scale Economies in Commercial Banking,” Journal of Banking and Finance, 8, 1984.Google Scholar
  9. Gilligan, Thomas, Michael Smirlock and William Marshall, “Scale and Scope Economies in the Multi-Product Banking Firm,” Journal of Monetary Economics, 13, 1984.Google Scholar
  10. Goldstein, Steven, James McNulty, and James Verbrugge, “Scale Economies in the Savings and Loan Industry Before Diversification,” Journal of Economics and Business, 1987.Google Scholar
  11. Hawawini, Gabriel and Itzhak Swary, “Mergers and Acquisitions in the U.S. Banking Industry” (Amsterdam: North Holland, 1990 ).Google Scholar
  12. Kellner, S. and G Frank Mathewson, “Entry, Size Distribution, Scale and Scope Economies in the Life Insurance Industry,” Journal of Business, 1983.Google Scholar
  13. Kim, H. Youn, “Economies of Scale and Scope in Multiproduct Financial Institutions,” Journal of Money, Credit and Banking, 18, 1986.Google Scholar
  14. Kolari, James and Asghar Zardhooki, “Bank Cost Structure and Performance” ( Lexington, Mass.: Heath Lexington, 1987 ).Google Scholar
  15. Lawrence, Colin, “Banking Costs, Generalized Functional Forms, and Estimation of Economies of Scale and Scope,” Journal of Money, Credit and Banking, Vol. 21, No. 3, 1989.Google Scholar
  16. Mester, Loretta, “A Multiproduct Cost Study of Savings and Loans,” Journal of Finance, 42, 1987.Google Scholar
  17. Mester, Loretta, “Traditional and Nontraditional Banking: an Information Theoretic Approach,” Federal Reserve Board Working Paper, No. 90–3, February 1990.Google Scholar
  18. Murray, John D. and Robert S. White, “Economies of Scale and Economies of Scope in Multiproduct Financial Institutions,” Journal of Finance, June 1983.Google Scholar
  19. Noulas, Athanasios G., Subhash C. Ray and Stephen M. Miller, “Returns to Scale and Input Substitution for Large U.S. Banks,” Journal of Money, Credit and Banking, Vol. 22, 1990.Google Scholar
  20. Saunders, Anthony and Ingo Walter, Universal Banking in the United States ( New York: Oxford University Press, 1994 ).Google Scholar
  21. Shaffer, Sherrill, “A Restricted Cost Study of 100 Large Banks,” Federal Reserve Bank of New York Working Paper, 1988.Google Scholar
  22. Smith, Roy C. and Ingo Walter, Global Banking (New York: Oxford University Press, 1997 ). Smith, Roy C., Comeback-The Restoration of American Banking Power ( Cambridge, Harvard Business School Press, 1993 )Google Scholar
  23. Smith, Roy C., Money Wars, ( New York, E.P. Dutton, 1990 )Google Scholar
  24. Tschoegl, Adrian E., “Size, Growth and Transnationality among the World’s Largest Banks,” Journal of Business, Vol. 56, No. 2, 1983.Google Scholar
  25. Walter, Ingo, Global Competition in Financial Services ( Cambridge: Ballinger-Harper Row, 1988 ).Google Scholar
  26. Walter, Ingo, and Smith Roy C., Investment Banking in Europe ( Oxford, Basil Blackwood, 1990 )Google Scholar
  27. Yoshioka, Kanji and Takanobu Nakajima, “Economies of Scale in Japan’s Banking Industry,” Bank of Japan Monetary and Economic Studies, September 1987.Google Scholar

Copyright information

© Springer Science+Business Media Dordrecht 1998

Authors and Affiliations

  • Roy C. Smith
  • Ingo Walter

There are no affiliations available

Personalised recommendations