Effects, M&A , SMEs Lending
Most of the mergers and acquisitions that we have had are an outcome of various economic factors that proved favorable such as escalating in the GDP, fiscal policies, macroeconomic setting and higher interest rates (Wang, 2007). The factors do not only affect the M & A process but also have a significant role in identifying the mergers and acquisition strategies between target and bidding firms. The history of mergers and acquisitions is found from as early as the early years of the 19th century and involved different faces. From 1897 to 1904, merger occupied the place between the firms that were anti-competition and enjoyed their dominance in the business market in regards to their productivity in various sectors such as railways and electricity (Berger, 1998). Most mergers in this period were horizontal and were experienced between metal, construction and steel industries.
From 1903-1905, there was some transition. Most of the mergers in the first face were not successful (Berger, 1998). This was stimulated by decelerating of the world's financial system in the early 1900. The apex judiciary gave its directive on the anti-competitive mergers claiming that they could be demerged by Sherman Act implementation. From 1916 to 1940, there was more concentration on mergers between oligopolies as opposed to anti-competitive firms (Wang, 2007). The merger and acquisition process was influenced by the financial boom after the World War 1. The mergers that came into place in 1916 to 1929 were multinational or horizontal in nature. The phase ended with a great decline in the stock market accompanied by great depression.
[...] This was stimulated by decelerating of the world's financial system in the early 1900. The apex judiciary gave its directive on the anti-competitive mergers claiming that they could be demerged by Sherman Act implementation. From 1916 to 1940, there was more concentration on mergers between oligopolies as opposed to anti-competitive firms (Wang, 2007). The merger and acquisition process was influenced by the financial boom after the World War 1. The mergers that came into place in 1916 to 1929 were multinational or horizontal in nature. [...]
[...] From 1981 to 1989, the acquisition of the companies that were large in size was realized. Companies such as pharmaceuticals, aviation, oil and gas brought together their business with their regional and international counterparts (Berger, 1998). This phase ended with the introduction o anti acquisition laws that led to restructuring of fiscal organizations. From 1992 till today, the phase has been dependent on globalization, deregulation policies and upsurge in the stock market (Wang, 2007). There were major merges that took place between banking giants and telecom that were sponsored by equities. [...]
[...] Most of the empirical research on the effect of M&A on the SMEs lending has directed its focus on the US market by use of the bank level balance sheet (Berger et. al, 1998). Mergers among the banks have reduced the credit availability for the SMEs (Keeton, 1996). Most banks lending activities associated with the SMEs tend to reduce as the size of the bank mergers reduce. There are four main effects of M&A on SMEs Lending according to The Effects of M&A on Small and Medium Business Lending (Wang, 2007). [...]
[...] In addition, the main motives for M & A in the banking sector are the desires of the board to have more power, improve efficiency and enhance growth of opportunities through economies of scale. The SMEs are essential to almost all world economies but particularly to the developing countries. WE have also reviewed the various effects of M&As on small and medium enterprises lending according to empirical results that include the static, restricting, direct and external effects. References Ayyagari, M., Beck, T., & Demirguc-Kunt, A. (2007). Small and medium enterprises across the globe. Small Business Economics, 415-434. [...]
[...] Berger, A. N., Saunders, A., Scalise, J. M., & Udell, G. F. (1998). The effects of bank mergers and acquisitions on small business lending. Journal of financial Economics, 187-229. Demirguc-Kunt, A. (2007). Small and Medium Enterprises Across the Globe. Small Business Economics 415-434. Di Patti, E. B., & Gobbi, G. [...]
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