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Essay sample - financial intermediation
Finance & Accounting
Pages 12 (3012 words)
REFEREE REPORT: Bank Consolidation and Stability: The Canadian Experience, 1867-1935 Summary Bank Consolidation and Stability: The Canadian Experience, 1867-1935 is a study conducted by ______________ investigating the relationship between consolidations after mergers and acquisition and the stability in the Canadian financial industry…
It was based on the efficiency hypothesis model and was distinguished from the imminent failure model. After analyzing 33 mergers during the 1867-1935 period, the author found that the consolidation and integration (which result as consequences of mergers and acquisitions) reduce systemic risk. An important variable in this finding is the identification of the role of diversification in the dilution and management of risks. The study also proposed the empirical validity of concentration-stability hypothesis as a framework for explaining the stability of Canadian banks. It was found that strong concentration of banks, which came as an offshoot of mergers and acquisitions, was a strong predictor of stability. What is good about the paper The paper is significant for several reasons. It contains important insights on the developmental evolution of the Canadian banking sector. The author has also proposed and explained insights that could enrich the extant literature on the positive impact of mergers and acquisitions (M&As). The successful use and evaluation of hypotheses and the systematic assessment approaches included can provide helpful insights to researchers interested in the same or in related research topics. These constitute the reasons why it is worthy of publication. This section will explain this in detail. ...
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