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Challenges to GlobalizationAnalyzing the Economics$
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Robert E. Baldwin and L. Winters

Print publication date: 2004

Print ISBN-13: 9780226036151

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226036557.001.0001

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The Cross-Border Mergers and Acquisitions Wave of the Late 1990s

The Cross-Border Mergers and Acquisitions Wave of the Late 1990s

(p.411) 11 The Cross-Border Mergers and Acquisitions Wave of the Late 1990s
Challenges to Globalization

Simon J. Evenett

University of Chicago Press

This chapter discusses the nature of the wave of cross-border mergers and acquisitions (M&A) that occurred during the period of rapid globalization in the 1990s. It then focuses on one particular service sector, namely banking, to investigate whether there is evidence that cross-border M&A in this industry resulted in greater spreads between the interest rates paid by borrowers and those paid to depositors. The analysis yields several findings. First, the recent cross-border M&A wave is in real terms at least five times larger than its predecessor in the 1980s. Second, although the latest wave involved firms from more countries than in the 1980s, the overwhelming bulk of such M&A still took place among the members of the OECD. Third, despite its greater scale in real terms, the latest wave of cross-border M&A represents purchases of only a small fraction of the publicly traded corporate assets in industrial economies, especially in the G7 leading industrial economies. Foreigners are, therefore, not taking over large tranches of national economies through cross-border M&A. Fourth, the preponderance of cross-border M&A in the late 1990s were in service sectors, many of which are pretty much immune to import competition. Fifth, in the banking sector, estimating the effects of cross-border mergers and acquisitions requires paying careful attention to sample composition. A commentary is also included at the end of the chapter.

Keywords:   globalization, mergers, acquisitions, banking sector, interest rates, OECD

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