Yi, Ha Chin2009-08-132012-02-242008-01Yi, H. C. (2008). A study of consolidations between banks and non-banks: Motivations and consequences. Research Enhancement Program, Texas State University, San Marcos, TX.https://hdl.handle.net/10877/2794Research Enhancement Program Final ReportThis study focuses on the reasons for and the implications of banks' decisions to acquire non- bank financial service firms (non-banks). The choice to acquire non-banks is driven by both external forces such as deregulation and regulatory capital and by internal forces such as a diversification strategy and efforts to enhance revenue and return to equity holders. We find that whereas the impact of acquiring non-banks increases their non-interest income, it also increases their non-interest expense. The net effect of choosing non-bank acquisitions lowers their subsequent return on assets, market value, and stock returns, as well as increasing their risk. However, the non-bank acquisitions do significantly increase the acquiring banks top executives' subsequent compensation. We conclude that non-bank acquisitions are driven by both regulatory and strategic forces within the banking industry. However, such acquisitions manifest into agency problems.Text1 page1 file (.pdf)enbanksfinancial service firmsfinancingfinancial motivationsReport