DISCRIMINANT CHARACTERISTICS OF UNITED-STATES BANKS ACQUIRED WITH OR WITHOUT FEDERAL-ASSISTANCE

An extensive literature review of statistical studies on merger, acqui sition and takeover activities in various sectors is presented. It rev eals a large number of efforts, models and pitfalls to classify and pr edict acquired or bankrupt vs. non-acquired or healthy firms. In this study we considered twenty endogenous bank variables in order to deter mine the most important characteristics that differentiate US bank mer gers/acquisitions with or without federal assistance. We developed sev eral logistic regression models, with only three to five significant v ariables, which classified correctly about 93% of the 299 actual 1987- 88 cases (and 89% in the 56 case 1989 holdout sample).