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The Wallis Report and Implications of Bank Mergers for Efficiencies

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    Abstract

    This paper examines the competitive consequences of bank mergers and acquisitions with particular reference to the Wallis Inquiry into the Australian Financial System in 1996. The Government responded by adopting a four pillars policy preventing mergers among the four major banks. Using the super-efficiency data envelopment analysis model, the technical efficiencies of banks operating in Australia over the period from 1983 to 2001 are estimated. Two separate methods are employed to evaluate the characteristics and determinants of merger and acquisition activities in the sector. The first method examines economic performance of banks involved in merger activities. A second method is also used to determine program efficiency differences between banks of different entry types after adjusting for differences in intra-group managerial inefficiency. The empirical results demonstrate the role of takeover in improving efficiency performance of individual banks, banks of different types and the entire Australian banking sector. Conclusions and policy implications are drawn.

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    File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2006-12eco.pdf
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    Bibliographic Info

    Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2006_12.

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    Length: 41 pages
    Date of creation: 29 Oct 2006
    Date of revision:
    Handle: RePEc:dkn:econwp:eco_2006_12

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    Web page: http://www.deakin.edu.au/buslaw/aef/index.php

    Related research

    Keywords: bank mergers; data envelopment analysis; technical efficiency; super efficiency;

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