Empirical Analysis On The Emerging National Bank, M & A Premium Determinants

Since the 90s last century, starting from the United States, there is a boom of banking mergers and acquisitions all over the world, accompanied by the premium paid by merger banks. Premium is the gap between the total amount which should be paid and the stock value of the target bank four weeks before the merge. As banking industry is so important for society and economy development, it is necessary to research the determinants of this premium.Former studies about premium, either in banking industry or other fields, mainly focused on USA market and west European financial industry. Although researches about these advanced areas do have value, emerging countries are now more and more astonishing and powerful due to their economic performance. So these nontraditional countries'experiences are also worth studying.This paper will firstly demonstrate the banking mergers and acquisitions in emerging countries in recent years, and also the premium phenomenon. Then retrospect the existing studies about the determinants of banking M&A premiums, here all the possible determinants(11 in total) are classified into 4 categories:Bank specific factors, Deal characteristic factors, Regulation factors and Host country financial market structure. All the data used in the empirical part were collected from World Bank Database, IMF database and Securities Data Company. After the panel data regression, we add 4 more control variables to do the robustness test for the first part. And the final conclusion is, whatever control variables are included, the profitability of the target and the information disclosure and effective supervision can attract mergers to raise the premium. This paper also elaborates recent examples of Chinese banks'M&A, and some suggestions in this field.