Capital regulation and its impact on mergers & acquisitions: A study on thrift and commercial banks in the Philippines

• Main Authors: Casa, Jacob Orlando M., Galido, Reynato J., Navarro, Justin Patrick M., Wassmer, Maria Anastasia Dominique M.
• Format: text
• Language: English
• Published: Animo Repository 2017
• Subjects: Bank mergers > Philippines; Banks and banking > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/6282
• Institution: De La Salle University

This study aims to divulge into the motives and effects of capital regulation on mergers and acquisitions (M&A) among thrift and commercial banks in the Philippines. Particularly to shed light to the question: What is the impact of capital regulation on mergers and acquisitions among thrift and commercial banks in the Philippines? Considering the fact that this is the first study done in the previously mentioned country, the proponents utilized population data from 2001-2017. As the occurence of M&As among thrift banks (TBs) and commercial banks (KBs) in the Philippines is a rarity, 20 cases of this event were studied given the period of research. Both quantitative and qualitative methods were used by the proponents to further examine and strengthen the results garnered by this research. Multivariate multiple regression approach was applied as a quantitative measure to examine return on equity (ROE), return on assets (ROA), bank capital adequacy ratio (BCAR), and other bank specific variables. Results obtained from this method suggest that financial performance was not positively impacted by the event of M&A, attibutable to various behavioral theories, including voluntary employee turnover theory and Carnegie school organizational theory. Drawing attention to the gross misconception regarding the M&A in relation to profitability. Noticeably, in the model there was also weak but negative relationship between capital adequacy ratios was discovered post M&A. This was rebutted by actual analysis of the 20 cases, as BCAR levels were seen to significantly rise after M&A. To further enhance the study, a trend analysis was conducted to determine the effects of capital regulatory reforms on capital adequacy ratios on the same group. Moreover, no specific trend was observed between TBs and KBs' CAR ratios, rather a phenomenon called regulatory pressure theory and capital regulation theory was uncovered after the implementation of various capital regulatory reforms. As for the qualitative portion of the study, survey que