Discriminant characteristics of US banks acquired with or without federal assistance

An extensive literature review of statistical studies on merger, acquisition and takeover activities in various sectors is presented. It reveals a large number of efforts, models and pitfalls to classify and predict acquired or bankrupt vs. non-acquired or healthy firms. In this study we considered twenty endogenous bank variables in order to determine the most important characteristics that differentiate US bank mergers/acquisitions with or without federal assistance. We developed several logistic regression models, with only three to five significant variables, which classified correctly about 93% of the 299 actual 1987–88 cases (and 89% in the 56 case 1989 holdout sample).