M&A IN BANKING

How the M&A in the banking sector affect the access to credit of SMEs in Spain?

Table of Contents

Introduction3

Literature Review4

Research Methodology10

Data Sources and Research Limitations10

Data Types11

Results11

Conclusion13

How the M&A in the banking sector affect the access to credit of SMEs in Spain?

Introduction

The study is related to mergers and acquisitions in the banking sector that affect access to credit of SMEs particularly in Spain. It is observed that mergers and acquisitions play a significant part in providing credit to SMEs. This shows that the purpose of mergers and acquisitions get fulfilled. The purchase of one Bank by another (acquisition) or the union of two banks, leading to another larger (merger) is one of the recurrent ways to win today and competitiveness dimension. This banking operations caused by the identification of a threat or an opportunity in the market, we are now in the prime of such operations, both globally and nationally. In recent times there has been a rapid increase in the volume and number of mergers and acquisitions in the banking industry of Spain. For the business community, these processes have a definite logic, because it implies a clear economic motivation. Integration processes of structural change involve an increasing number of regions and expand trans-national transactions. The expansion of markets, production synergies and financial benefits including the factors leading to an increase in the cost of equity is all considered as the economic motivational factor which leads to the credit of SMEs.

The pressures on mergers and acquisitions of banks come from different factors, on the one hand, the positive evolution of the stock that is when the stock goes up and the rise in the economy, companies are worth more. Therefore, the increase in debt capacity to acquire other banks, along with low-interest rates facilitate banks to get a higher level of borrowing to tackle the trading banks, increasing their ability to pay) have meant that the liquidity of the banks is very high. On the other hand, opening of markets and Globalization has strengthened the competition that banks face, which must compete with other cost, size and technological capacity. Also, venture capital boom has increased the possibilities of banking investment; all of these factors play a vital role in access to credit of SMEs that is small medium enterprises in mergers and acquisitions.

Literature Review

The landscape of the Spanish banking has changed considerably since the 80's. Entry into Europe, increased competition, driven by technological innovation has enabled the development of new strategies for a banking environment more dynamic and globalize. The horizon of Spanish banks has changed dramatically over the past two decades: they have internationalized. Between 1978 and 1983, Spain experienced a major banking crisis that led to the closure or the purchase of 52 of the 116 banks that existed before this one, total 25 % of commercial bank assets. This crisis was beneficial because it began a process of change and a change in strategy. The 90 spent the concentration and internationalization of the Spanish banking ...