Mergers and Acquisitions Between Systemic Banks in Greece and Their Impact on Concentration and Control

The aim of this chapter is to investigate the impact of potential Systemic Bank Mergers and Acquisitions (M&As) in Greece on the competitiveness of the country’s banking system. The subject is highly topical nowadays given the various reports circulating in financial news sources regarding upcoming mergers between systemic banks in Greece. The period under investigation includes the decade 2008–2018, which covers the pre-crisis period and spans the crisis period in Greece, which started as a sovereign debt crisis, which affected also the banking sector. In our analysis, we apply the Lerner index to estimate the impact of each potential merger on the concentration of the Greek banking sector, and then we classify the M&As according to the Herfindahl-Hirschman and the Bank Z indices. We find that concentration has no significant impact on stability, while competition relates marginally significantly and positively to stability. Furthermore, according to the GMM estimators, there is no evidence of a significant correlation between the two indices. Finally, we apply a third model, in which a square term represents competition, to test the presence of non-linearity. The findings of our study contribute to the theory of effective structure demonstrating that an increase in concentration, because of M&As, does not affect market power and bank stability, whereas by focusing on effective management, operational costs and non-performing loans are very likely to increase ban stability.