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

Author

Listed:
  • 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.

Suggested Citation

  • Sufian, Fadzlan & Abdul Majid, Muhamed Zulkhibri & Haron, Razali, 2007. "Efficiency and Bank Merger in Singapore: A Joint Estimation of Non-Parametric, Parametric and Financial Ratios Analysis," MPRA Paper 12129, University Library of Munich, Germany, revised 01 Oct 2007.
  • Handle: RePEc:pra:mprapa:12129
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    File URL: https://mpra.ub.uni-muenchen.de/12129/1/MPRA_paper_12129.pdf
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    References listed on IDEAS

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    Cited by:

    1. Malak Reda, 2013. "The Effect of Mergers and Acquisitions on Bank Efficiency: Evidence from Bank Consolidation in Egypt," Working Papers 770, Economic Research Forum, revised Sep 2013.

    More about this item

    Keywords

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

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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