This study investigates the productivity effects of bank mergers and acquisitions (M&As) within the European Union (EU) from a causal perspective. As the banking sector in the EU continues to undergo significant consolidation, understanding the implications of these structural changes on productivity is crucial for policymakers, investors, and stakeholders. The primary objective of this research is to assess whether and to what extent M&As influence the productivity of banks operating in the EU.

We employ a robust econometric framework to analyze data from a comprehensive sample of EU banks over the past two decades. By leveraging a difference-in-differences approach combined with propensity score matching, we aim to isolate the causal effects of M&As on bank productivity. This methodology allows us to control for confounding factors and ensure that the observed impacts are attributable to the mergers and acquisitions themselves rather than external influences.

Our findings indicate that M&As have a heterogeneous impact on bank productivity across different EU countries and bank sizes. On average, we observe a positive effect on productivity in the post- merger period, driven primarily by increased operational efficiencies and economies of scale.

Larger banks, in particular, tend to experience more pronounced productivity gains compared to their smaller counterparts. This suggests that scale economies and resource optimization play a significant role in enhancing productivity following M&As.

However, the study also uncovers variability in outcomes based on the type of merger and the specific banking markets involved. For instance, mergers involving cross-border transactions or consolidation within highly competitive markets demonstrate different productivity effects.

Additionally, the short-term improvements in productivity may not always translate into long-term sustainable gains, as integration challenges and market dynamics can offset initial benefits.

The implications of these findings are multifaceted. For regulators and policymakers, understanding the productivity implications of M&As can inform decisions related to market concentration and competition. For banks, the results highlight the importance of strategic planning and effective integration processes to realize the potential productivity benefits of M&As.

This study delves into the non-linear relationship between exchange rate fluctuations and U.S. industrial production, offering a nuanced understanding of how currency value changes impact the industrial sector. Traditional economic models often assume linear effects, overlooking the complexities inherent in real-world data. This research employs advanced econometric techniques to uncover non-linear patterns that better reflect the actual dynamics between exchange rates and industrial output. By utilizing threshold regression models and non-linear time series analysis, the study identifies critical points where exchange rate changes exert disproportionately large or small effects on industrial production. The findings reveal that while small fluctuations in exchange rates have minimal impact on U.S. industrial production, significant deviations trigger substantial changes in output, often with delayed effects. This asymmetry suggests that industries are more sensitive to extreme exchange rate movements, which can lead to pronounced shifts in production levels. Additionally, the research highlights sector-specific responses, indicating that the impact of exchange rate changes varies across different industries, depending on their exposure to international markets and currency risk. These insights are crucial for policymakers and business leaders as they navigate the complexities of global trade and investment. The study contributes to a deeper understanding of the interaction between exchange rates and industrial performance, emphasizing the need for tailored strategies to manage currency risk and its implications for economic stability and growth.