Transparency of Regulation and Cross-Border Bank Mergers

There is ample anecdotal evidence that political influence might constitute a barrier to the integration of European banking markets. Based on a dataset on the transparency on the supervisory review process of bank mergers in the EU, we estimate the probability that a credit institution is taken over as a function of bank and country characteristics and the transparency of merger control. The results indicate that a credit institution is systematically more likely to be taken over by foreign banks if the regulatory process is transparent. Particularly large banks seem to be less likely to be taken over by foreign credit institutions if merger control lacks procedural transparency.

Köhler, Matthias (2009), Transparency of Regulation and Cross-Border Bank Mergers, International Journal of Central Banking Vol. 5(1) , 39-74