Assessment of mergers and acquisitions in banking on small open economy as sustainable domestic financial system development

Purpose -Th e banking and fi nancial sector is a dynamic sector that regularly goes through a series of structural changes. Global bank consolidation an d concentration processes have prompted a lively discussion on the part of scholars and practitioners regarding the infl uence of concentration on the effi ciency and competition levels in the banking system, the fi nancial and macroeconomic stability of countries and the growth of economies. It has been noted that the banking sector tolerates high levels of concentration rather well compared to other business sectors, thanks to the apparent benefi ts of concentration on the increasing stability of the fi nancial system. Th e aim of this article is to identify underlying causes affecting the mergers and acquisitions in banking and to assess their eff ect on the domestic fi nancial system. Design/methodology/approach -Th e authors used qualitative and quantitative methods of study in analysing the impact of bank mergers and acquisitions on the country's fi nancial system. Th e qualitative analysis has allowed the authors to present their own interpretation of the issue at hand, and has given them a chance to approach the problem of the study holistically. Th e quantitative study has provided a basis for analysing dynamic regularities, performing and comparing calculations, assessing data interrelation and reliability. Th e article includes logical analysis and synthesis of studies dealing with bank mergers and acquisitions. To identify the potential elements that lead to stability in the fi nancial system, and the possible impact that the on-going consolidation process might have on the banking sector, the authors have carried out expert analysis. Findings -Mergers and acquisitions in banking take place to enhance the wellbeing of shareholders and to attain an economic eff ect; the aspect of stability in mergers and acquisitions is short-lived and is usually inspired by the government. Lithuania's modern banking market has evolved through mergers and acquisitions; strategic investors have helped countries with transitional economies ensure the stability of their banking systems and capitalise on economies of scale. Several large banks operating in a small open economy (and a transitional economy in particular) provide the backbone for the stability of its fi nancial sector. Practical implications -Th is research enriches and enhances the potential of Lithuanian science dealing with the topic of banking operations and risk management in the context of the fi nancial system stability. Th e results produced by this research could be applied to analyse and assess consolidation processes that could take place on the markets and in particular, in small open economies. Originality/Value -Th is article dealing with the impact of mergers and acquisitions of banks on the country's fi nancial system is a new and original piece of scientifi c work that evaluates the mutual ties of banks' mergers and acquisitions, as well as their eff ect on the domestic fi nancial system. Th e authors have conducted an in-depth study of the impact of mergers and acquisitions on the country's fi nancial system, revealing potential problems involved in merger and acquisition transactions.

Business · Financial system · Mergers and acquisitions · Sustainable development · Banking stability, regulation, efficiency · Economic Analysis and Policy · Finance · Islamic Finance and Banking Studies

• The impact of regime-switching behaviour of price volatility on efficiency of the US sovereign debt market

  Open Access•Omar Masood, Bora Aktan et al.•Economic Research-Ekonomska…•2017

  Add to list

• Coefficient alpha and the internal structure of tests

  Open Access•Lee J Cronbach•Psychometrika•1951

  Add to list