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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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Author Info
Sufian, Fadzlan
Abdul Majid, Muhamed Zulkhibri
Haron, Razali

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

Find related papers by JEL classification:
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages

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