Correlation between Interest Rates and Bank Mergers

Author

Maren Egging, University of MississippiFollow

Date of Award

Spring 5-11-2024

Document Type

Undergraduate Thesis

Department

Business Administration

First Advisor

Kathleen Fuller

Second Advisor

Arup Ganguly

Third Advisor

Kenneth Rich

Relational Format

Dissertation/Thesis

Abstract

This paper examines the relation between macroeconomic factors and bank mergers and acquisitions from 1995 to 2022. I build upon the work of Etsy et al. (1994) to determine an updated analysis of how interest rates and stock market returns may influence merger activity in the banking segment. Using a dataset of 1,153 large bank mergers, I perform correlation analyses to draw three main conclusions. Firstly, bank mergers demonstrate weaker correlations with key macroeconomic variables than industrial mergers. Secondly, I observe material differences from the work of Etsy et al. with what appears to be significant changes in underlying relations. Finally, I discovered a non-linear pattern between the number of mergers and certain metrics, which suggests a difference from past predictive patterns.

Recommended Citation

Egging, Maren, "Correlation between Interest Rates and Bank Mergers" (2024). Honors Theses. 3086.
https://egrove.olemiss.edu/hon_thesis/3086