The Managerial, Regulatory, and Financial Determinants of Bank Merger Premiums

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This paper analyzes the managerial, regulatory, and financial determinants of US bank merger premiums. We use both individual acquirer and target bank characteristics. We also examine state regulation of acquirer and target banks from a geographically dispersed population, allowing us specifically to test the effect of a varied state regulatory menu. The study finds merger premiums to be related to the characteristics of both acquirer and target banks and the regulatory environments in both acquirer and target bank states. We also find evidence that the separation of ownership and control in acquirer and target banks has a significant effect on merger premiums.