Effects of total factor productivity on bank acquisitions prediction: empirical evidence from Malaysia
by Fadzlan Sufian
International Journal of Business Innovation and Research (IJBIR), Vol. 4, No. 3, 2010

Abstract: The present paper examines the impact of mergers and acquisitions on the total factor productivity of the Malaysian banking sector. The analysis consists of two stages. Firstly, the Malmquist productivity index (MPI) is applied to a [−3, +3] window to examine the total factor productivity of the acquiring and target banks during the pre and post merger periods. Secondly, a battery of parametric and non-parametric univariate tests is performed to examine the difference in total factor productivity of the Malaysian banking sector during the pre and post merger periods. The findings suggest that the Malaysian banking sector has exhibited a higher total factor productivity level during the post merger period attributed to technological progress. However, the results do not provide conclusive evidence on the less productive banks becoming the target for acquisitions.

Online publication date: Fri, 02-Apr-2010

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