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Protection of Domestic bank Ownership in France and Germany: The Functional Equivalency of Institutional Diversity in Takeovers

Valdivielso del Real, R (2014) Protection of Domestic bank Ownership in France and Germany: The Functional Equivalency of Institutional Diversity in Takeovers. Review of International Political Economy. Special Issue: Assets or Liabilities? Banks and the Politics of Foreign Ownership versus National Control, 21 (4). pp. 790-819. ISSN 1466-4526

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Abstract

We investigate the character of the market for corporate control (i.e. takeovers) in French and German banking. The key feature of this character is the marked ability of French and German banks to resist unsolicited takeover bids, especially – although not exclusively– those from foreign competitors. We present an institutional perspective to account for the restrained character of takeovers in French and German banking. Our perspective is composed of two elements. First, institutional arrangements are important since they structure power relations among firm stakeholders by providing opportunities, as well as imposing constraints, to influence the decision-making process in which takeover transactions take place. Second, institutional arrangements provide firm stakeholders with several potential opportunities, not just one, to block unsolicited bids since takeover contests are composed of sequences of decisions for which approval is needed at each stage. French and German banks have used different mixes of institutional arrangements, themselves located at different stages of takeover transactions, to secure restrained markets for corporate control. Our institutional analysis, in turn, also illustrates an important shortcoming of banking sector protectionism, namely the contribution of protection from unsolicited takeover bids to the building of banks carrying systemic risks.

Item Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in Review of International Political Economy on 25th April 2014 available online: http://wwww.tandfonline.com/10.1080/09692290.2014.910539
Uncontrolled Keywords: 1402 Applied Economics, 1605 Policy And Administration, 1606 Political Science
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JA Political science (General)
Divisions: Liverpool Business School
Publisher: Routledge, Taylor
Date Deposited: 19 Jun 2015 10:05
Last Modified: 13 Sep 2017 07:29
DOI or Identification number: 10.1080/09692290.2014.910539
URI: http://researchonline.ljmu.ac.uk/id/eprint/366

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