Bank management in bank decline: Bank mergers as a recovery recipe?
DOI:
https://doi.org/10.18533/jefs.v2i06.149Keywords:
Banking crisis, Bank management, Decline model, Merger.Abstract
The aim of this article is to present a model concerning bank management during the period of decline. Our focus is on bank mergers as a way out in from a crises situation. Generally, the explicit factor behind bank decline usually relates an economic downturn. However, the implicit, triggering factor behind bank decline relates to bank management. The available options for crisis bank management beside mergers are to cut costs, to increase income, to get more own capital, to manipulate bookkeeping data, to sell the bank, to buy banks or to declare failure. Based on 309 bank mergers during 1990 to 2013, we found that bank managers in many cases gradually lost their confidence concerning their capability of successfully running their banks, therefore choosing to merge.
References
Amihud Y., Miller G., 1998. Bank mergers & acquisitions. Kluwer Academic Publisher, Dordrecht.
Berger A.L., Demsetz R.S., Strahan, P.E., 1999. The consolidation of the financial service industry: Causes, consequences, and implications for the future. Journal of Banking and Finance, 23(2):135-194.
Collins, J., 2009. How the mighty fall and why some companies never give in. New York, USA. Harper Collins Publishers Inc.
European Central Bank (2014) Statistical data warehouse http://sdw.ecb.int/browseChart.do?REF_AREA=152&type=&MFI_LIST=102&node=4586742&q=&sfl2=4&SERIES_KEY=187.MFI.M.FI.102.T.1&DATASET=0&sfl3=4&trans=AF Accessed 16.3.2014
Fisher, I.,1933. The debt-deflation theory of great depressions, Econometrica, October, 337-357.
Greenhalgh L., 1983. Organizational decline, In Samule B. Bachanach (ed.) Research in the sociology of organizations, Greenwich, CT: JAI Press, 2:231-278.
Hadlock C.J., Houston J.F., Ryngaert M., 1999. The role of managerial incentives in bank acquisitions. Journal of Banking and Finance, 23(2-4), 221-249.
Hiilamo H., 1995. SKOP lyhyt historia, WSOY, Juva.
Kangas T., 2006. Suomen pankkikriisin alueellinen ulottuvuus: Esseitä paikallisista toimijoista ja toteuttajista. PhD Thesis. Helsinki School of Economics, Acta Universitatis Oeconomicae Helsingiensis, Helsinki.
Kiefer M. V., 2014. Bank failures and mergers in Turkey: 1992-2014. International Journal of Finance and Banking, 1(3): 45-64.
Kjellman A., 1996. What can we learn from the Finnish banking crisis? The case of the failures in the savings bank sector, Meddelanden från Ekonomisk-Statsvetenskapliga Fakulteten vid Åbo Akademi A:420, Turku.
Kjellman A., 1997. Essays on performance and financing decisions during the 1990s recession in Finland. PhD Thesis. Åbo Akademi University Press, Turku.
Kjellman A., Nordman M., 2000. Strategies behind and effects of bank mergers in Finland, Meddelanden från Ekonomisk-statsvetenskapliga Fakulteten vid Åbo Akademi, A:517.
Lenz R., 1981. Determinants of organizational performance: An interdisciplinary review, Strategic Management Journal, 2(2): 131-154.
McKinley W., Latham S., Braun M., 2014. Organizational decline and innovation: Turnarounds and downward spirals, Academy of Management Review, 39(1): 86-110.
Pietilä, A-P., 1995. Pankkikirja, Helsinki, Art House.
Piloff S.J., Satomero A.M., 1997. The value effect of bank mergers and acquisitions. Published in Amihud, Y. and Miller G., eds. 1997. Bank Mergers & Acquisitions. Dordrecht, Kluwer Academic Publisher.
Rhoades S.A., 1999. The efficiency effects of bank mergers: An overview of case studies of nine mergers. Journal of Banking and Finance, 22(2-4):273-291.
Saari M., 1992. Minä Christopher Wegelius. Jyväskylä, Gummerus.
Santoso T. R., Hartono M., Agung Prabowo M., Riyanto G., Eferin S., Tjiamudjaja Y., 2014. The arena of multiinterest, governance and fraud – a critical review of BC bailout. International Journal of Finance and Banking, 1(2):25-35.
Solttila, H., Vihriälä, V., 1994. Finnish banks’ problem assets: Result of unfortunate asset structure or too rapid growth, Bank of Finland Discussion Papers 23/94.
Söderberg, A-M.,Vaara, E., 2003 (Eds.). Merging across borders. People, cultures and politics. Copenhagen Business School Press. Copenhagen.
Tainio, R., Korhonen P.J., Santalainen, T.J., 1991. In search of explanation for bank performance - Some Finnish data, Organization Studies, 12(3): 425-450.
Tainio R., Santalainen T., Sarvikivi K., 1991. Organizational changes in a bank group: The merger process and its generative mechanisms, Scandinavian Journal of Management, 7(3): 191-203.
Tourish D., Hargie O., 2012. Metaphors of failure and the failures of metaphor: A critical study of root metaphors used by bankers in explaining the banking crisis. Organization Studies 33 (8): 1045-1069.
Weitzel W., Jonsson, E., 1989. Decline in organizations: A literature integration and extension. Administrative Science Quarterly, 34:91-109.
Vainio V., 1995. Konkurrensen omvälver bankmarknaden, Unitas 1:3.
Vander Vennet R., 1996. The effects of mergers and acquisitions on the efficiency and profitability of EC credit institutions. Journal of Banking and Finance, 20(9):1531-1558.
Vihriälä V., 1993. Suomen pankkikriisi - Mitä opimme? The Finnish Economic Journal, 4:581-589.
Downloads
Published
Issue
Section
License
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) after official publication, as it can lead to productive exchanges as well as greater citation of published work (See The Effect of Open Access).
