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Non-Parametric Analysis of Efficiency Gains from Bank Mergers in India

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Author Info
Adrian R. Gourlay () (Dept of Economics, Loughborough University)
Geetha Ravishankar () (Dept of Economics, Loughborough University)
Tom Weyman-Jones () (Dept of Economics, Loughborough University)

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Abstract

This paper offers an insight into the effectiveness of economic policy reforms in the Indian Banking System by examining the efficiency benefits of mergers among Scheduled Commercial Banks in India over the post-reform period 1991-92 to 2004-05. It does this by using the methodology developed by Bogetoft and Wang (2005). We also provide a metric for judging the success or failure of a merger. Overall, we find that bank mergers in the post-reform period possessed Considerable potential efficiency gains stemming from harmony gains. Post-merger efficiency analysis of the merged bank with a control group of non-merging banks reveals an initial merger related efficiency advantage for the former that, while persistent, did not show a sustained increase this failing to provide merging banks with a competitive advantage vis-a-viz their non-merging counterparts.

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File URL: http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/Gourlay_Ravishankar_Weyman_Jones_Indian_Banks.pdf
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Publisher Info
Paper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2006_18.

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Date of creation: Oct 2006
Date of revision: Oct 2006
Handle: RePEc:lbo:lbowps:2006_18

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Related research
Keywords: Data Envelopment Analysis; Mergers; Banking; Intermediation Approach; Production Approach.;

Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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  14. Altunbas, Yener & Liu, Ming-Hau & Molyneux, Philip & Seth, Rama, 2000. "Efficiency and risk in Japanese banking," Journal of Banking & Finance, Elsevier, vol. 24(10), pages 1605-1628, October. [Downloadable!] (restricted)
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