The Impact of Bank Mergers and Acquisitions on Financial Stability: An Empirical Analysis

This thesis examines how bank mergers and acquisitions affect financial stability, using a panel of 2,983 banks across 139 countries over 2004–2023, with 249 acquisitions identified through matching Refinitiv SDC transaction data to Orbis. Stability is measured via the bank Z-score, and the empirical strategy relies on within-bank fixed effects, comparing each acquiring bank to itself before and after the deal. The results show that banks become measurably less stable after completing an acquisition: the Z-score declines by roughly 19% relative to pre-acquisition levels. This finding holds up across nine robustness checks, including a propensity-score-matched sample and an event-study specification showing the effect builds gradually rather than instantaneously, with no evidence of pre-existing divergence between acquiring and non-acquiring banks.