Merger and optimal number of firms: an integrated simulation approach
In a market where imperfect competition occurs as a result of mergers, this study proposes a framework consisting of both efficiency and risk analyses that allow the simulation of pro forma mergers and hence the determination of the optimal number of firms in the industry. This is valuable policy information for regulators concerned with possible intervention in the case of competition and anti-trust violations, and also for business managers seeking acquisition targets. The framework is applied to the banking industry in Taiwan. Results reveal the potential for industrial restructuring in a sector where the optimal number of Bank Holding Companies (BHCs) is between four and six, subject to whether partial control is assumed.
Volume (Year): 40 (2008)
Issue (Month): 18 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEC20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEC20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
- Rhoades, Stephen A., 1998. "The efficiency effects of bank mergers: An overview of case studies of nine mergers," Journal of Banking & Finance, Elsevier, vol. 22(3), pages 273-291, March.
- Mark L. Mitchell & Kenneth Lehn, 1990. "Do Bad Bidders Become Good Targets?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 3(2), pages 60-69.
- L. Lin & J. Piesse, 2004. "Identification of corporate distress in UK industrials: a conditional probability analysis approach," Applied Financial Economics, Taylor & Francis Journals, vol. 14(2), pages 73-82.
- Bengt Holmstrom & Jean Tirole, 1994.
"Financial Intermediation, Loanable Funds and the Real Sector,"
95-1, Massachusetts Institute of Technology (MIT), Department of Economics.
- Bengt Holmstrom & Jean Tirole, 1997. "Financial Intermediation, Loanable Funds, and The Real Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 663-691.
- Holmström, Bengt & Tirole, Jean, 1994. "Financial Intermediation, Loanable Funds and the Real Sector," IDEI Working Papers 40, Institut d'Économie Industrielle (IDEI), Toulouse.
- Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001.
"The Effects of Mergers: An International Comparison,"
CIG Working Papers
FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003. "The effects of mergers: an international comparison," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 625-653, May.
- H. Ooghe & T. De Langhe & J. Camerlynck, 2003.
"Profile of multiple versus single acquirers and their targets : a research note,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
03/179, Ghent University, Faculty of Economics and Business Administration.
- Hubert Ooghe & Tine De Langhe & Jan Camerlynck, 2006. "Profile of multiple versus single acquirers and their targets: a research note," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 725-733.
- Hubert Ooghe & Tine De Langhe & Jan Camerlynck, 2003. "Profile Of Multiple Versus Single Acquirers And Their Targets: A Research Note," Vlerick Leuven Gent Management School Working Paper Series 2003-12, Vlerick Leuven Gent Management School.
- Santomero, Anthony M. & Seater, John J., 2000.
"Is there an optimal size for the financial sector?,"
Journal of Banking & Finance,
Elsevier, vol. 24(6), pages 945-965, June.
- Kohers, Theodor & Huang, Ming-hsiang & Kohers, Ninon, 2000. "Market perception of efficiency in bank holding company mergers: the roles of the DEA and SFA models in capturing merger potential," Review of Financial Economics, Elsevier, vol. 9(2), pages 101-120, December.
- Rivard, Richard J. & Thomas, Christopher R., 1997. "The effect of interstate banking on large bank holding company profitability and risk," Journal of Economics and Business, Elsevier, vol. 49(1), pages 61-76, February.
- Estrella, Arturo, 2001. "Mixing and matching: Prospective financial sector mergers and market valuation," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2367-2392, December.
- Miller, Stephen M. & Noulas, Athanasios G., 1996. "The technical efficiency of large bank production," Journal of Banking & Finance, Elsevier, vol. 20(3), pages 495-509, April.
- Charles F. Mason & Stephen Polasky, 1997. "The Optimal Number of Firms in the Commons: A Dynamic Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 1143-60, November.
- Boyd, John H. & Graham, Stanley L. & Hewitt, R. Shawn, 1993. "Bank holding company mergers with nonbank financial firms: Effects on the risk of failure," Journal of Banking & Finance, Elsevier, vol. 17(1), pages 43-63, February.
- Halkos, George & Salamouris, Dimitrios, 2001. "Efficiency Measures of the Greek Banking Sector: A Non-Parametric Approach for the Period 1997-1999," MPRA Paper 2858, University Library of Munich, Germany.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- David Hauner, 2004.
"Explaining Efficiency Differences Among Large German and Austrian Banks,"
IMF Working Papers
04/140, International Monetary Fund.
- David Hauner, 2005. "Explaining efficiency differences among large German and Austrian banks," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 969-980.
- Larry D. Wall & Alan K. Reichert & Sunil Mohanty, 1993. "Deregulation and the opportunities for commercial bank diversification," Economic Review, Federal Reserve Bank of Atlanta, issue Sep, pages 1-25.
- Berggren, Christian, 2003. "Mergers, MNES and innovation--the need for new research approaches," Scandinavian Journal of Management, Elsevier, vol. 19(2), pages 173-191, June.
- Adnan Kasman & Canan Yildirim, 2006. "Cost and profit efficiencies in transition banking: the case of new EU members," Applied Economics, Taylor & Francis Journals, vol. 38(9), pages 1079-1090.
- Charlie Weir & David Laing, 2003. "Ownership structure, board composition and the market for corporate control in the UK: an empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1747-1759.
- Mitchell, Mark L & Lehn, Kenneth, 1990. "Do Bad Bidders Become Good Targets?," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 372-98, April.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, 09.
- Berger, Allen N., 2003. "The efficiency effects of a single market for financial services in Europe," European Journal of Operational Research, Elsevier, vol. 150(3), pages 466-481, November.
- Robert E. Kohn, 1985. "A General Equilibrium Analysis of the Optimal Number of Firms in a Polluting Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 18(2), pages 347-54, May.
- N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
- Luo, Xueming, 2003. "Evaluating the profitability and marketability efficiency of large banks: An application of data envelopment analysis," Journal of Business Research, Elsevier, vol. 56(8), pages 627-635, August.
- Juan Fernandez De Guevara & Joaquin Maudos, 2004. "Measuring welfare loss of market power: an application to European banks," Applied Economics Letters, Taylor & Francis Journals, vol. 11(13), pages 833-836.
When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:40:y:2008:i:18:p:2413-2421. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.