By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > Investing > Tough U.S. Financial Conditions Could Torpedo Wall Street Dealmaking, New Research Shows
Investing

Tough U.S. Financial Conditions Could Torpedo Wall Street Dealmaking, New Research Shows

News Room
Last updated: 2023/05/28 at 3:44 PM
By News Room
Share
2 Min Read
SHARE

What happens in the U.S. financial system doesn’t stay there.

Tough financial conditions tend to rollover into the global economy and disrupt Wall Street’s mergers and acquisitions dealmaking machine, new research shows. And it could likely hit the big investment banks hard.

“We find that financial conditions in the core have significant spillover effects on cross-border M&As,” states the report titled “Cross-Border Spillovers: HOW U.S. Financial Conditions Affect M&As Around the World.” The paper was written by Katharina Bergant and Prachi Mishra at the International Monetary Fund, plus Raghuram Rajan at the University of Chicago Booth School of Business. And it ws distributed by the National Bureau of Economic Resarch

The researchers found the that a 1 percentage pint rise in the U.S. Financial Conditions index, which indicates its harder to get financing, leads to a decrease in value of approximately 10% for M&A deals.

However, there is some good news in this mix. While deals are priced lower when financial conditions are tighter, there is a greater likelihood that the merger or acquisition will make money for the shareholders.

The authors state the matter like so:

  • “Acquisitions that happen around tighter financial conditions globally create greater value; while those that coincide with loose financial conditions presage weaker performance.”

That fits with a long understood phenomenon: Many deals fail to add value in any way as shown in Bob Bruner’s book “Deals from Hell.”

So while Wall Street’s bankers — who get paid in relation to the deal fees — may suffer from tighter financial conditions, stock market investors may do substantially better.

Overall, U.S. financial conditions have tightened since the beginning of the year, although some of that move has been unwound in the last few weeks, according to the Chicago Fed, according to its National Financial Conditions Index. In other words, conditions are tighter.

In turn that should be good for investors.

Read the full article here

News Room May 28, 2023 May 28, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Client Challenge

Client Challenge JavaScript is disabled in your browser. Please enable JavaScript to…

Donald Trump’s escalating attacks on Federal Reserve unnerve investors

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

Spain overtakes Germany as top EU asylum destination

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Brussels stalls probe into Elon Musk’s X amid US trade talks

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

The fight to revive Europe’s shrinking rural areas

Nicolás de la Fuente, a 92-year-old walking his dog on the desolate…

- Advertisement -
Ad imageAd image

You Might Also Like

Investing

Nursing Home Stocks Could Suffer from this Medicaid Spending Remedy

By News Room
Investing

Bitcoin Drops Below $90,000 Again. What Could Move It Next.

By News Room
Investing

These Stocks Are Moving the Most Today: Marvell, Nvidia, Broadcom, GM, Tesla, MongoDB, Burlington, and More

By News Room
Investing

Nvidia Stock Falls as Marvell Earnings Compound AI Gloom. The Rising Risks for Chips.

By News Room
Investing

This analyst says Tesla deliveries will be 16% below expectations. Musk is part of the problem.

By News Room
Investing

BP CEO was awarded no bonus pay from oil giant’s financial performance

By News Room
Investing

Shares of Starlink’s European competitor have tripled. CEO says it can do the job in Ukraine.

By News Room
Investing

GE Vernova Stock Rises as Analyst Flips to Upgrade After Rating Cut

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?