CROSS-BORDER BANK ACQUISITIONS AND COMPANY PERFORMANCE: THE CASE OF EMERGING MARKETS Demir, Mert MBA, Department of Business Administration Supervisor : Assist. Prof. Dr. Seza DaniSoglu May 2008, 103 pages In recent years, cross-border mergers and acquisitions have spurred in the global economy. With the breaking down of barriers around national economies, those economies that used to be centrally-planned and closed in the past have emerged as economies that offer invaluable investment and risk diversification opportunities that investors seek. As a natural result of this change, these economies become major targets for foreign investors. This thesis examines the impact of this foreign investment trend specifically for those bank mergers and acquisitions that take place in emerging economies. The impact of these transactions on the acquirer and target company shareholders and firm performance are analyzed and it is found that neither parties&rsquo / shareholders receive a significantly positive benefit in the short-term but there are significant benefits in the long-term. Moreover, while these bank consolidations resulted in improved profitability, efficiency and asset size for the target firms, no significant change is observed in deposit size, market share and capital adequacy of the targets. Similarly, improvement in profitability is evidenced for the acquirers while no major change in leverage risk is observed.

This thesis analyzes the profit efficiency of the Turkish banking sector after the restructuring program by using Stochastic Frontier Approach. 28 banks are included in the analysis and the data belongs to the period 2002-2009. Profit efficiency scores of 28 banks are estimated by SFA. When the efficiency scores are analyzed according to the ownership status, profit efficiency scores of the state owned banks are found higher than other bank groups. Moreover, according to the asset size, large scale banks&rsquo / profit efficiency scores are found to be higher than the medium and small scale banks.

The financial crises and bank runs in the past decade increased attention to the financial systems. In Turkey as in Europe banks are main financial intermediaries and financial crises occur mostly due to realization of risks in banks. Although liquidity risk is embedded into daily operations of banks unless controlled it may take banks into insolvency and even bankruptcy. This thesis aims to examine liquidity risk structure of Turkish banking sector. As a sample the domestic commercial banks in Turkey is chosen. The risk profile of the sector is examined by using a ratio analysis. The accounting figures in balance sheets and income statements of banks are employed for statistical analysis about liquidity risk of the sector. The means of liquidity ratios among different groups of banks are compared via analysis of variance. Moreover relation between liquidity risk and return in the sector is analysed by using panel data regressions.

This thesis analyzes the bank-specific, industry-specific and macroeconomic determinants of bank profitability (ROA) in 31 OECD Countries between 2000 and 2009 using a panel data. Each country

This study investigates the factors that were important in the failure of 36 banks in 1997-2006. The study uses cross-section time series data from 81 banks and employs limited dependent variable models, a duration model and a dynamic panel data model in the analysis. The major concerns are to examine the determinants of banking failures by explaining the contribution of microeconomic and macroeconomic factors in Turkish banking system, to estimate the likelihood of banking failure and timing of failure, to analyze survival time path of failed and non-failed banks separately and to construct the degree of fragility of overall banking system. Furthermore, the determinants of bank profitability and the effects of bank-specific factors and macroeconomic conditions on bank profitability are analyzed by using dynamic panel data model.

An extensive literature has examined many of the consequences of foreign bank participation in emerging markets. However, research to date has largely focused on the effects of foreign bank participation in domestic banks and yet revealed little about the situation for foreign banks. The thesis, examines Citibank in Turkey as a particular case in order to address this gap. The results show that Citibank

The study of money and banking is largely considered the purview of economics. Nevertheless, money theme cannot be neglected by social analysis for money is a social construct, embedded in social interactions. Financial system, money&rsquo / s highest level of institutionalization, also cannot be abstracted from social and political sub-structure. In this thesis we tried to look at the way in which Turkish financial transformation in early 1980&rsquo / s has found its reflections on social sphere / in terms of changing social relations and institutions. We first presented a short history of Turkish financial system, then we focused on the essential features of 1980 Transformation, covering its political background. The emphasis is made on power relations between bureaucracy, political will and financial market participants. We also combined the main features of mainstream theoretical approaches to money and finance from the fields of sociology and we put current debates on Turkish financial liberalization into the context of sociology. As we considered the ways financial relations shape societal developments and political processes, we tried to identify how debt-money system had permeated further in the social relations through financialization of society

Early Warning Systems (EWSs) for banking sectors are used to measure occurrence risks of banking crises, generally observed with a rundown of bank deposits and widespread failures of financial institutions. In countries with a small number of banks, for example Turkey with 48 banks (BDDK, 2011), every bank may be considered to have a systematic importance since the failure of any individual bank may carry a potential threat to lead to a banking crisis. Taking into account this fact the present study focuses on EWSs in Turkey. Since there is no single correct EWS to apply to all cases, in this study, 300 models were constructed and tested to find models as accurate as possible by using a trial-and-error process and by searching optimal feature subset or classifier methods. Empirical results indicate that prediction accuracy did not increase significantly while we got closer to the actual occurrence of bankruptcy. An important finding of the study was that trends of financial ratios were very useful in the prediction of bank failures. Instead of failures as a result of instant shocks, the banks&#039 / failures followed through a path: first a downward movement affected the efficiency of the banks&#039 / officers and the quality of management structure measured with &quot / Activity Ratios&quot / , then the profitability of the banks measured with &quot / Profit Ratios&quot / declined. At last, the performance and the stability of banks&#039 / earnings stream measured with &quot / Income-Expenditure Structure Ratios&quot / and the level and quality of the banks&#039 / capital base, the end line of defense, measured with &quot / Capital Ratios&quot / . At the end of study, we proposed an ensemble model which produced probability ratios for the success rates of the banks. The proposed model achieved a very high success rate for the banks we considered.