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The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.

This paper studies the effect of mergers on the efficiency of commercial banks in Malaysia from 1995-2005. We utilise the non-parametric frontier approach, Data Envelopment Analysis (DEA), to analyse the efficiency of banks during the financial crisis, the merger year, and the pre-and post merger pe...

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Main Author: Muhammad Hafiz, Desa
Format: Thesis
Language:English
English
Published: 2007
Subjects:
HG Finance
Online Access:http://etd.uum.edu.my/33/1/muhammad_hafiz.pdf
http://etd.uum.edu.my/33/2/muhammad_hafiz.pdf
http://etd.uum.edu.my/33/
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spelling my.uum.etd.332013-07-24T12:05:22Z http://etd.uum.edu.my/33/ The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia. Muhammad Hafiz, Desa HG Finance This paper studies the effect of mergers on the efficiency of commercial banks in Malaysia from 1995-2005. We utilise the non-parametric frontier approach, Data Envelopment Analysis (DEA), to analyse the efficiency of banks during the financial crisis, the merger year, and the pre-and post merger periods. To make comparison of the efficiency of domestic banks, nine foreign banks are also included in the sample. Results show that before financial crisis, foreign banks were more efficient than domestic banks. Surprisingly, domestic banks had a higher efficiency level than foreign banks in the crisis year with an average technical efficiency score of 96.6% compared to 78.9%. It is evidence that 10 domestic banks selected by Bank Negara Malaysia to be the anchor commercial banks were not really affected by financial crisis which hit the country in 1997. However, domestic banks were inefficient during merger year compared to foreign banks. This was due to some of the acquiring banks merged with weaker banks and influenced the bank's performance. Mergers seem to allow efficient banks to gain control of weaker banks, thus helping them to increase input efficiency. The inefficient banks in merger year were also influenced by integrating system and technology in different location and geographical area. We find that efficient banks are not determined by size as small and medium banks are more efficient. The technical efficiency of domestic banks in five years before and five years after the merger were 92.3% and 97.2% respectively. The results also reveal that Malaysian domestic banks experienced an average efficiency of 100% in year 2005. Overall, this study has established that the merger programme in Malaysia was successful. 2007 Thesis NonPeerReviewed application/pdf en http://etd.uum.edu.my/33/1/muhammad_hafiz.pdf application/pdf en http://etd.uum.edu.my/33/2/muhammad_hafiz.pdf Muhammad Hafiz, Desa (2007) The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia. Masters thesis, Universiti Utara Malaysia.
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Electronic Theses
url_provider http://etd.uum.edu.my/
language English
English
topic HG Finance
spellingShingle HG Finance
Muhammad Hafiz, Desa
The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
description This paper studies the effect of mergers on the efficiency of commercial banks in Malaysia from 1995-2005. We utilise the non-parametric frontier approach, Data Envelopment Analysis (DEA), to analyse the efficiency of banks during the financial crisis, the merger year, and the pre-and post merger periods. To make comparison of the efficiency of domestic banks, nine foreign banks are also included in the sample. Results show that before financial crisis, foreign banks were more efficient than domestic banks. Surprisingly, domestic banks had a higher efficiency level than foreign banks in the crisis year with an average technical efficiency score of 96.6% compared to 78.9%. It is evidence that 10 domestic banks selected by Bank Negara Malaysia to be the anchor commercial banks were not really affected by financial crisis which hit the country in 1997. However, domestic banks were inefficient during merger year compared to foreign banks. This was due to some of the acquiring banks merged with weaker banks and influenced the bank's performance. Mergers seem to allow efficient banks to gain control of weaker banks, thus helping them to increase input efficiency. The inefficient banks in merger year were also influenced by integrating system and technology in different location and geographical area. We find that efficient banks are not determined by size as small and medium banks are more efficient. The technical efficiency of domestic banks in five years before and five years after the merger were 92.3% and 97.2% respectively. The results also reveal that Malaysian domestic banks experienced an average efficiency of 100% in year 2005. Overall, this study has established that the merger programme in Malaysia was successful.
format Thesis
author Muhammad Hafiz, Desa
author_facet Muhammad Hafiz, Desa
author_sort Muhammad Hafiz, Desa
title The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
title_short The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
title_full The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
title_fullStr The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
title_full_unstemmed The Effect of Mergers on the Efficiency of Commercial Banks: Evidence From Malaysia.
title_sort effect of mergers on the efficiency of commercial banks: evidence from malaysia.
publishDate 2007
url http://etd.uum.edu.my/33/1/muhammad_hafiz.pdf
http://etd.uum.edu.my/33/2/muhammad_hafiz.pdf
http://etd.uum.edu.my/33/
_version_ 1644276060783640576
score 13.211869

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