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Taiwan second financial restructuring and commercial bank productivity growth: M&As impact

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  • Hsing-Chin Hsiao
  • Mei-Hwa Lin
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    Abstract

    Purpose – The purpose of this paper is to examine the impact of merger and acquisition (M&As) of “second financial restructuring” (SFR) on the productivity growth of commercial banks in Taiwan. Design/methodology/approach – The paper uses the Malmquist productivity change index to evaluate the changes from pre-SFR to SFR period and from pre-SFR to post-SFR period. In addition, the bootstrapping regression method is applied to examine the relationship of SFR policy and productivity change. Findings – Merged banks have improved their productivity and scale efficiency after the M&As program of SFR. In addition, the greater productivity growth of merged banks than non-merged banks is attributed to small-sized and private-voluntary merged banks. Furthermore, the small-sized merged banks have greater productivity growth and scale efficiency improvement than the big-sized merged banks, and the government-mandatory merged banks have lower productivity growth than private-voluntary merged banks after the SFR. Research limitations/implications – This study has an academic implication for providing additional empirical evidence related to the impact of government M&As policy on bank productivity growth in the developing countries. Practical implications - The findings on this paper have implications for financial reform policy and banking management on M&As activity, in particular, as they clarify the differential effects of big-sized vs small-sized and government-mandatory vs private-voluntary merged banks. Originality/value – Understanding the impacts of financial reform is particularly important as the banking industry has become increasingly competitive. This paper contributes to this area by assessing the impact of the M&As policy of SFR on productivity growth and evaluating differential effects of M&As.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal Review of Accounting and Finance.

    Volume (Year): 12 (2013)
    Issue (Month): 4 (September)
    Pages: 327-350

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    Handle: RePEc:eme:rafpps:v:12:y:2013:i:4:p:327-350

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    Web page: http://www.emeraldinsight.com

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    Related research

    Keywords: Data envelopment analysis; Financial reform; Malmquist productivity change index; Mergers and acquisitions;

    References

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