Title: Mergers and acquisitions in the Malaysian banking industry: technical and scale efficiency effects

Authors: Fadzlan Sufian

Addresses: Department of Banking and Finance, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia

Abstract: Employing an event study with a three-year window analysis together with the non-parametric frontier approach, Data Envelopment Analysis (DEA), this paper investigates the effects of mergers and acquisitions on Malaysian banks| technical and scale efficiency. The results suggest that the merger has resulted in a higher mean technical efficiency of the Malaysian banking sector post-merger. In five out of the seven merger cases, the empirical findings suggest that the acquirers were relatively more technically efficient. The empirical findings also suggest that the acquiring banks| mean technical efficiency improved (deteriorates) from the merger with a more (less) efficient bank in five out of the seven merger cases analysed.

Keywords: data envelopment analysis; DEA; mergers; acquisitions; Malaysia; financial services management; banking; technical efficiency; scale efficiency.

DOI: 10.1504/IJFSM.2007.016287

International Journal of Financial Services Management, 2007 Vol.2 No.4, pp.304 - 326

Available online: 15 Dec 2007 *

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