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Control Changes and Firm Performance in Banking

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  • Maria Eugenia Delfino

Abstract

This paper examines the effect of control changes on efficiency and productivity in the banking industry of Argentina. This industry represents an interesting case study as banks underwent corporate changes of different types including privatization, foreign acquisition of domestic banks and mergers and acquisitions among local institutions. Bank productivity is measured and decomposed into the effects due to returns to scale, technical progress and efficiency, while bank efficiency is related to a set of variables controlling for changes in bank ownership. The evidence suggests that control changes due to privatization had a positive short-term effect on productivity in part as a result of efficiency gains, which were then gradually lost over time. Results also indicate that foreign acquisitions led to stronger productivity performance of acquired banks, though they did not have any significant effect on efficiency. Finally, mergers and acquisitions had a negative impact on productivity as a result of scale effects despite the long-term efficiency improvements.

Suggested Citation

  • Maria Eugenia Delfino, 2007. "Control Changes and Firm Performance in Banking," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 14(2), pages 261-281.
    • Handle: RePEc:taf:ijecbs:v:14:y:2007:i:2:p:261-281
    DOI: 10.1080/13571510701344061
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    References listed on IDEAS

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    1. Boris Pleskovic & Joseph E. Stiglitz, 2000. "Annual World Bank Conference on Development Economics 1999," World Bank Publications - Books, The World Bank Group, number 13839, December.
    2. Kaminsky, Graciela Laura & Schmukler, Sergio L., 2002. "Short-run pain, long-run gain : the effects of financial liberalization," Policy Research Working Paper Series 2912, The World Bank.
    3. Allen N. Berger & Robert DeYoung & Hesna Genay & Gregory F. Udell, 1999. "Globalization of financial institutions: evidence from cross-border banking performance," Working Paper Series WP-99-25, Federal Reserve Bank of Chicago.
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