Domestic banking sector development and cross border mergers and acquisitions in Africa
Date
2012
Journal Title
Journal ISSN
Volume Title
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Abstract
Recently, economists have started taking a closer look at cross border mergers and acquisitions (M&As) due to its phenomenal rise in the past two decades. This study investigates the relation between banking sector development and cross M&As in Africa. Our sample consists of 11 African countries with data covering the period, 1993-2008. We use a Baltagi panel instrumental variable Error Component Two Stage Least Squares (EC2SLS) estimator with the Baltagi-Chang estimators of the variance components to deal with endogeneity. The results of the study indicate that banking sector development promotes cross border M&A activity in Africa. We also document evidence suggesting that cross border M&A activity drives banking sector development in Africa. Overall, our evidence suggests a two-way causation between banking sector development and cross border M&As. © 2012 Production and hosting by Elsevier B.V.
Description
Keywords
Africa, Banks, Cross border mergers and acquisitions
Citation
Review of Development Finance
2
1
32
42
2
1
32
42