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A two‐stage inverse data envelopment analysis approach for estimating potential merger gains in the US banking sector

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  • Gholam R. Amin
  • Mustapha Ibn Boamah

Abstract

Mergers and acquisitions are mainly due to financial and technological innovations but could also be due to changes in the structure of the economy, which alters the optimal production functions of banks. Banks that seek to be operationally efficient would focus more on expanding their asset size, in the face of bad loans, leading to the acquisition of less efficient banks. This paper develops two‐stage inverse data envelopment analysis (DEA) models for estimating potential gains from bank mergers for the top US commercial banks. The results show additional intermediate and final outputs at different predefined target levels of technical efficiencies.

Suggested Citation

  • Gholam R. Amin & Mustapha Ibn Boamah, 2021. "A two‐stage inverse data envelopment analysis approach for estimating potential merger gains in the US banking sector," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1454-1465, September.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:6:p:1454-1465
    DOI: 10.1002/mde.3319
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    References listed on IDEAS

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    Cited by:

    1. Moghaddas, Zohreh & Tosarkani, Babak Mohamadpour & Yousefi, Samuel, 2022. "Resource reallocation for improving sustainable supply chain performance: An inverse data envelopment analysis," International Journal of Production Economics, Elsevier, vol. 252(C).
    2. Christos Genakos & Andreas Lamprinidis & James Walker, 2023. "Evaluating merger effects," CEP Discussion Papers dp1921, Centre for Economic Performance, LSE.
    3. Genakos, Christos & Lamprinidis, Andreas & Walker, James, 2023. "Evaluating merger effects," LSE Research Online Documents on Economics 121325, London School of Economics and Political Science, LSE Library.
    4. Li‐Ting Yeh & Dong‐Shang Chang & Huei‐Min Li, 2022. "Developing a network data envelopment analysis model to measure the efficiency of banking with the governance, innovation, and operations," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2863-2874, October.
    5. Christos Genakos & Andreas Lamprinidis & James Walker, 2023. "Evaluating merger effects," POID Working Papers 072, Centre for Economic Performance, LSE.

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