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Efficiency and Bank Merger in Singapore: A Joint Estimation of Non-Parametric, Parametric and Financial Ratios Analysis

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  • Sufian, Fadzlan
  • Abdul Majid, Muhamed Zulkhibri
  • Haron, Razali

Abstract

This paper provides event study window analysis of pre- and post-merger bank performance in Singapore by employing Financial Ratio Analysis and Data Envelopment Analysis (DEA) approach. The findings from financial ratio analysis suggests that the merger has not resulted in a higher profitability of Singaporean banking groups post-merger, which could be attributed to the higher costs incurred. However, the merger has resulted in higher Singaporean banking groups’ mean overall efficiency. In most cases, the acquiring banks mean overall efficiency improved (deteriorates) post-merger resulting from merger with a more (less) efficient bank. Further, Tobit regression analysis is employed to explain changes in the efficiencies with the finding shows that, more efficient banks tend to maintain higher degree of capitalization, post higher profits and incur higher overhead costs.

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File URL: http://mpra.ub.uni-muenchen.de/12129/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12129.

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Date of creation: 01 Sep 2007
Date of revision: 01 Oct 2007
Handle: RePEc:pra:mprapa:12129

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Keywords: Bank Mergers; Data Envelopment Analysis (DEA); Tobit Model; Financial Ratios; Singapore;

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