Impact of the financial crisis on cross-border mergers and acquisitions and concentration in the global banking industry

The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007–2008 financial crisis on cross-border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging-market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000–2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging-market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets.

Introduction: the impact of the 'War on Terror' on executive–legislative relations: a global perspective

In democratic polities, constitutional equilibria or balances of power between the executive and the legislature shift over time. Normative and empirical political theorists have long recognised that war, civil unrest, economic and political crises, terrorist attacks, and other events strengthen the power of the executive, disrupt and threaten constitutional politics, and damage democratic institutions: crises require swift action and executives are thought to be more capable than parliaments and legislatures of taking such actions. The terrorist attacks on New York and Washington on 11 September 2001 and the ensuing so-called 'war on terror' declared by President Bush clearly constituted a crisis, not only in the United States but also in other political systems, in part because of the US's hegemonic position in defining and shaping many other states' foreign and domestic policies. Dicey, Schmitt, and Rossiter suggest that critical events and political crises inevitably trigger the concentration of (emergency) powers in the hands of the executive. Aristotle and Machiavelli questioned the inevitability of this process. This article and the articles that follow in this Special Issue utilise empirical evidence, through the use of case studies of the United States, the United Kingdom, Russia, Australia, Israel, Italy and Indonesia, to address this debate. Specifically, the issue explores to what extent the external shock or crisis of 9/11 (and other terrorist attacks) and the ensuing 'war on terror' significantly changed the balance of executive-legislative relations from t (before the crisis) to t+1 (after the crisis) in these political systems, all of which were the targets of actual or foiled terrorist attacks. The most significant findings are that the shock of 9/11 and the 'war on terror' elicited varied responses by national executives and legislatures/parliaments and thus the balance of executive-legislative relations in different political systems; that, therefore, executive-legislative relations are positive rather than zero-sum; and that domestic political contexts conditioned these institutional responses.

Unnoticed apocalypse: the science fiction politics of urban crisis

The slogan ‘capitalism is crisis’ is one that has recently circulated swiftly around the global Occupy movement. From Schumpeter to Marx himself, the notion that the economic cycles instituted by capitalism require periodic crises as a condition of renewed capital accumulation is a commonplace. However, in a number of recent texts, this conception of crisis as constituting the very form of urban capitalist development itself has taken on a more explicitly apocalyptic tone, exemplified by the Invisible Committee's influential 2007 book The Coming Insurrection, and its account of what it calls simply ‘the metropolis’. ‘It is useless to wait’, write the text's anonymous authors, ‘for a breakthrough, for the revolution, the nuclear apocalypse or a social movement.… The catastrophe is not coming, it is here.’ In considering such an apocalyptic tone, this paper thus situates and interrogates the text in terms both of its vision of the metropolis as a terrain of total urbanization and its effective spatialization of the present as itself a kind of ‘unnoticed’ apocalypse: the catastrophe which is already here. It does so by approaching this not only apropos its place within contemporary debates surrounding leftist politics and crisis theory but also via its imaginative intersection with certain post-1960s science fiction apocalyptic motifs. What, the paper asks, does it mean to think apocalypse as the ongoing condition of the urban present itself, as well as the opening up of political and cultural opportunity for some speculative exit from its supposedly endless terrain?

Urban design, central London and the ‘crisis’ 2007-2013: business as usual?

London is changing, to a breath-taking extent. Beneath this fast paced activity, new patterns are forming and divisions that had been relatively unremarked before are now becoming increasingly visible. The ‘square mile’ of the City of London, which is now identified by some dramatically tall buildings, forms a contrast to the traditional urbanism of the City of Westminster, the majority of which is covered by conservation area legislation. This paper will consider this contrast from the perspective of urban design, examining both the wider development context for these changes and the separate design policies of these two historic organisations of local government. One of the key questions to be investigated is how these changes have impacted on the character of central London as a place. Moving on from the well-rehearsed debates about London’s skyline, the paper considers the significance of urban design in the context of a global urban spatial economy. It suggests that central London faces severe dilemmas about its future if the growth scenario continues.

Impact of the Financial Crisis on the Performance of European Acquisitions

This study looks at the impact of the recent financial crisis on the short-term performance of European acquisitions. We use institutional theory and transaction cost economic theory to study whether bidders derive lower or higher returns from acquisitions announced after 2008. We investigate shareholders’ stock price reaction to 2245 deals which occurred during 2004–12 across 22 European Union countries. Our results from both univariate and multivariate analysis show that the deals announced in the post-crisis period, corresponding to the period of economic recession, generate higher returns to shareholders as compared to acquisitions announced in the pre-crisis period. We also test the relevance of the Economic and Monetary Union (EMU), that is, the Eurozone, to this value accrual during the recessionary period. We observe that non-EMU transactions obtain significantly higher gains vis-à-vis EMU transactions in the post-crisis years. Overall, announcement returns of European acquisitions have been affected by the financial crisis and the global recession; and companies that target countries with different currency regimes are likely to generate better returns from their acquisitions.

Capital 2.0 capital formation and legal risk in a new global economic order from fiat to exit: including case studies of the proposed transatlantic trade and investment partnership between the United States and the European Union and the financing relation between the United States and the People’s Republic of China

Following the intrinsically linked balance sheets in his Capital Formation Life Cycle, Lukas M. Stahl explains with his Triple A Model of Accounting, Allocation and Accountability the stages of the Capital Formation process from FIAT to EXIT. Based on the theoretical foundations of legal risk laid by the International Bar Association with the help of Roger McCormick and legal scholars such as Joanna Benjamin, Matthew Whalley and Tobias Mahler, and founded on the basis of Wesley Hohfeld’s category theory of jural relations, Stahl develops his mutually exclusive Four Determinants of Legal Risk of Law, Lack of Right, Liability and Limitation. Those Four Determinants of Legal Risk allow us to apply, assess, and precisely describe the respective legal risk at all stages of the Capital Formation Life Cycle as demonstrated in case studies of nine industry verticals of the proposed and currently negotiated Transatlantic Trade and Investment Partnership between the United States of America and the European Union, TTIP, as well as in the case of the often cited financing relation between the United States and the People’s Republic of China. Having established the Four Determinants of Legal Risk and its application to the Capital Formation Life Cycle, Stahl then explores the theoretical foundations of capital formation, their historical basis in classical and neo-classical economics and its forefathers such as The Austrians around Eugen von Boehm-Bawerk, Ludwig von Mises and Friedrich von Hayek and most notably and controversial, Karl Marx, and their impact on today’s exponential expansion of capital formation. Starting off with the first pillar of his Triple A Model, Accounting, Stahl then moves on to explain the Three Factors of Capital Formation, Man, Machines and Money and shows how “value-added” is created with respect to the non-monetary capital factors of human resources and industrial production. Followed by a detailed analysis discussing the roles of the Three Actors of Monetary Capital Formation, Central Banks, Commercial Banks and Citizens Stahl readily dismisses a number of myths regarding the creation of money providing in-depth insight into the workings of monetary policy makers, their institutions and ultimate beneficiaries, the corporate and consumer citizens. In his second pillar, Allocation, Stahl continues his analysis of the balance sheets of the Capital Formation Life Cycle by discussing the role of The Five Key Accounts of Monetary Capital Formation, the Sovereign, Financial, Corporate, Private and International account of Monetary Capital Formation and the associated legal risks in the allocation of capital pursuant to his Four Determinants of Legal Risk. In his third pillar, Accountability, Stahl discusses the ever recurring Crisis-Reaction-Acceleration-Sequence-History, in short: CRASH, since the beginning of the millennium starting with the dot-com crash at the turn of the millennium, followed seven years later by the financial crisis of 2008 and the dislocations in the global economy we are facing another seven years later today in 2015 with several sordid debt restructurings under way and hundred thousands of refugees on the way caused by war and increasing inequality. Together with the regulatory reactions they have caused in the form of so-called landmark legislation such as the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, the JOBS Act of 2012 or the introduction of the Basel Accords, Basel II in 2004 and III in 2010, the European Financial Stability Facility of 2010, the European Stability Mechanism of 2012 and the European Banking Union of 2013, Stahl analyses the acceleration in size and scope of crises that appears to find often seemingly helpless bureaucratic responses, the inherent legal risks and the complete lack of accountability on part of those responsible. Stahl argues that the order of the day requires to address the root cause of the problems in the form of two fundamental design defects of our Global Economic Order, namely our monetary and judicial order. Inspired by a 1933 plan of nine University of Chicago economists abolishing the fractional reserve system, he proposes the introduction of Sovereign Money as a prerequisite to void misallocations by way of judicial order in the course of domestic and transnational insolvency proceedings including the restructuring of sovereign debt throughout the entire monetary system back to its origin without causing domino effects of banking collapses and failed financial institutions. In recognizing Austrian-American economist Schumpeter’s Concept of Creative Destruction, as a process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one, Stahl responds to Schumpeter’s economic chemotherapy with his Concept of Equitable Default mimicking an immunotherapy that strengthens the corpus economicus own immune system by providing for the judicial authority to terminate precisely those misallocations that have proven malignant causing default perusing the century old common law concept of equity that allows for the equitable reformation, rescission or restitution of contract by way of judicial order. Following a review of the proposed mechanisms of transnational dispute resolution and current court systems with transnational jurisdiction, Stahl advocates as a first step in order to complete the Capital Formation Life Cycle from FIAT, the creation of money by way of credit, to EXIT, the termination of money by way of judicial order, the institution of a Transatlantic Trade and Investment Court constituted by a panel of judges from the U.S. Court of International Trade and the European Court of Justice by following the model of the EFTA Court of the European Free Trade Association. Since the first time his proposal has been made public in June of 2014 after being discussed in academic circles since 2011, his or similar proposals have found numerous public supporters. Most notably, the former Vice President of the European Parliament, David Martin, has tabled an amendment in June 2015 in the course of the negotiations on TTIP calling for an independent judicial body and the Member of the European Commission, Cecilia Malmström, has presented her proposal of an International Investment Court on September 16, 2015. Stahl concludes, that for the first time in the history of our generation it appears that there is a real opportunity for reform of our Global Economic Order by curing the two fundamental design defects of our monetary order and judicial order with the abolition of the fractional reserve system and the introduction of Sovereign Money and the institution of a democratically elected Transatlantic Trade and Investment Court that commensurate with its jurisdiction extending to cases concerning the Transatlantic Trade and Investment Partnership may complete the Capital Formation Life Cycle resolving cases of default with the transnational judicial authority for terminal resolution of misallocations in a New Global Economic Order without the ensuing dangers of systemic collapse from FIAT to EXIT.