Work

Credit Risk, Bank Valuation, and the Moderating Role of Mergers and Acquisitions: Evidence from European and UK Banks

Year: 2026

Type: article

Abstract: This study examines how credit risk affects bank valuation and whether mergers and acquisitions (M&A) moderate this effect, using a panel of 102 listed Eurozone and UK banks from 2004 to 2024. Applying MM-quantile regression, we find that credit losses reduce valuation across all quantiles, especially for low-valued banks. M&A activity boosts valuation mainly for high-valued banks, while for weaker banks, acquisitions exacerbate the negative impact of credit deterioration. Robustness checks confirm these results. Our findings highlight that credit risk and consolidation have heterogeneous effects, suggesting that supervisory policies should consider banks’ market positions and distributional risk dynamics.

Source: Journal of risk and financial management

DOI: 10.3390/jrfm19060392

Authors: Karama Saadaoui, Rym Belgaroui, Salah Ben Hamad, Houda Hadj Kacem

Institutions: University of Sfax, Faculty of Economics and Management of Sfax, King Faisal University, Tunis University

Language: English

Topic: Banking stability, regulation, efficiency

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $1,689

Funder: King Faisal University