Abstract
We analyze the financial sector consolidation in Asia by using a comprehensive sample of bank M&As from 1995 to 2021. Our results show that M&A announcements by Asian domestic acquirers are associated with significant positive stock price returns to both acquirers and their rivals. In contrast, cross-border acquirers and their rivals experience negative but insignificant re-turns, while targets and their rivals record gains, regardless whether it is a domestic or cross-border transaction. Further analyses reveal that domestic acquirers obtaining larger relative in-creases in their market share benefit the most, indicating that market power considerations are the primary driver behind acquirers' positive returns. For cross-border acquirers, neither cultural differences nor regulatory arbitrage considerations can explain return patterns surrounding M&A announcements.