Bank Mergers & Acquisitions pp 175-190 | Cite as
Bank mergers and American bank competitiveness
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Abstract
In this paper we attempt to elaborate on the observation that “the common environmental feature that underlies mergers and acquisitions throughout the U.S. economy is increased competition.”1 Motivating this paper is the sharp contrast between the high cost of bank mergers and acquisitions and the large number of such transactions. The existing legal rules and regulations that govern bank mergers and acquisitions make such transactions very costly. The legal environment dramatically increases the transaction costs of mergers and acquisitions and especially of hostile takeovers in the field of banking.
Keywords
Corporate Governance Supra Note Mutual Fund Commercial Bank Pension Fund
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- 1.The Bank Merger Wave of the 90s: Nine Case Studies“, Charles W. Calomiris and Jason Karceski, Office for Banking Research, University of Illinois, Urbana/ Champaign, 1995.Google Scholar
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- 12.Pension fund assets, which now exceed two trillion dollars, include nearly a quarter of all equity securities and half of all corporate debt. The pension fund, now the dominant player in the world of institutional investing, scarcely existed a century ago, and was unimportant until the latter half of this century. In 1950, pension plans accounted for only 15.3% of the total holdings of institutional investors; by 1983 pension fund holdings had risen to 58.5% of institutional investments. R. Ippolito, Pensions, Economics, and Public Policy 157 (1986).Google Scholar
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- 18.Id.at 653. We wish, however, to emphasize that the reduction in bank monitoring in trading markets is replaced by market mechanisms such as the market for corporate control, incentive-based compensation packages for managers, and competition in internal labor markets.Google Scholar
- 19.Typically, commercial paper matures in 90 days or less.Google Scholar
- 20.Litt, Macey, Miller und Rubin, “Politics, Bureaucracies and Financial Markets: Bank Entry into Commercial Paper Underwriting in the United States and Japan,” 139 U. Pa. L. Rev. 369, 375 (1990).Google Scholar
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- 22.The Glass-Steagall Act, officially designated the Banking Act of 1933, is the popular name of Ch. 89, 48 Stat. 162 (codified in amended in scattered sections of 12 U.S.C.).Google Scholar
- 23.Section 16 is codified at 12 U.S.C. §16 of Glass-Steagall applicable to state banks that are members of the Federal Reserve System.Google Scholar
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