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The effect of mergers and acquisitions on bank efficiency in Greece

Author

Listed:
  • Panayiotis P. Athanasoglou

    () (Bank of Greece)

  • Sophocles N. Brissimis

    () (Bank of Greece and University of Piraeus)

Abstract

This paper studies the impact of recent mergers and acquisitions (M&As) on the cost and profit efficiency of banks in Greece. To this end, three methods have been applied: (i) analysis of developments in certain cost and profit indicators and their dispersion for bank groups according to their size; (ii) calculation of cost and profit inefficiency (relative to the best performer); and (iii) analysis of individual cases of M&As in terms of changes in bank costs and profitability relative to banks not involved in M&As. Additionally, the paper assesses the existence of economies of scale and the extent to which they are exploited through M&As. The empirical results indicate that M&As, in particular those involving small banks, had a positive effect on cost and profit efficiency and that scope exists for further improvement in efficiency. Also, M&As helped large banks to exploit economies of scale, which previously were found in small to medium- sized banks.

Suggested Citation

  • Panayiotis P. Athanasoglou & Sophocles N. Brissimis, 2004. "The effect of mergers and acquisitions on bank efficiency in Greece," Economic Bulletin, Bank of Greece, issue 22, pages 7-31, January.
  • Handle: RePEc:bog:econbl:y:2004:i:22:p:7-31
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    File URL: https://www.bankofgreece.gr/BogEkdoseis/econbull200401.pdf
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    More about this item

    Keywords

    Mergers and acquisitions; bank cost and profit efficiency; economies of scale;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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