Selection and hidden bias in cross-border bank acquisitions: Ukraine’s takeover wave

We investigate the impact of cross-border takeovers on the performance of target banks in Ukraine. We combine propensity score matching and a difference-in-difference methodology, checking for temporary unobservables. Acquirers mainly targeted large less-capitalised banks with average efficiency and profitability. After takeover, the cost efficiency of the acquired banks improved thanks to a decreased reliance on deposits but this did not result in higher profitability or higher loan market shares. Overall, our findings only tally piecemeal with the existing multi-country studies for transition economies.