engleski

Key Decision-Making Factors in Bank Mergers

The paper presents some important determinants of mergers and acquisitions in the Croatian banking system. The aim of the research was to define the role of financial as well as strategic indicators as key factors in decision-making process within bank integrations. In fact, the most important period of merger wave in the bank industry occurred at the beginning of the century when several state-owned banks, after the rehabilitation program performed by the state, were privatized and consequently became majority foreign-owned. Apart from that process, development of the Croatian banking system was driven by other M&A decisions which influenced the macro indicators of concentration and the performance indicators of the banking system as a whole. It is questionable to what extent the decisions were made as a part of strategic plan to enter the banking system or the investors were mostly motivated by the performance of financial indicators of the observed banks. The research emphasizes the role of financial indicators and is based on the assumption that integration decisions rely firstly on comprehensive analyses of financial indicators. Consequently, using historical data on bank mergers and acquisitions in the Croatian banking system, different types of financial indicators, which probably affected the final investor decisions, were observed. With the assumption of only financial indicators as relevant in decision making and assuming the subjectivity of investors and strategic decisions as external factors, the level of significance for each financial indicator was calculated. Finally, according to the significance of some indicators, it was shown that some of the performance indicators played more important role in the M&A process. These results, based on the historical data of financial indicators, could be a relevant starting point for observation of future M&A processes which will probably occur in a future consolidation of the banking system.

'Financial indicators ; Bank integration ; Mergers and acquisitions (M&A)'

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