{"id":14986,"date":"2023-05-28T15:35:08","date_gmt":"2023-05-28T19:35:08","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/tough-u-s-financial-conditions-could-torpedo-wall-street-dealmaking-new-research-shows\/"},"modified":"2023-05-28T15:35:09","modified_gmt":"2023-05-28T19:35:09","slug":"tough-u-s-financial-conditions-could-torpedo-wall-street-dealmaking-new-research-shows","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=14986","title":{"rendered":"Tough U.S. Financial Conditions Could Torpedo Wall Street Dealmaking, New Research Shows"},"content":{"rendered":"
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What happens in the U.S. financial system doesn\u2019t stay there.<\/p>\n

Tough financial conditions tend to rollover into the global economy and disrupt Wall Street\u2019s mergers and acquisitions dealmaking machine, new research shows. And it could likely hit the big investment banks hard.<\/p>\n

\u201cWe find that financial conditions in the core have significant spillover effects on cross-border M&As,\u201d states the report titled \u201cCross-Border Spillovers: HOW U.S. Financial Conditions Affect M&As Around the World.\u201d 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<\/p>\n

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.<\/p>\n

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.<\/p>\n

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The authors state the matter like so:<\/p>\n