Title: Mergers and acquisitions and the determinants of bank total factor productivity: empirical evidence from Malaysia

Authors: Fadzlan Sufian

Addresses: Khazanah Research and Investment Strategy, Khazanah Nasional Berhad, Level 35, Tower 2, Petronas Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia.

Abstract: In this paper, we employ alternate techniques to examine the impact of mergers and acquisitions on banks total factor productivity. These alternate techniques extend from use of the non-parametric, |frontier|-oriented method of Malmquist Productivity Index (MPI) and include the more traditional regression-based approaches using central tendency estimates. Using data from the Malaysian banking sector, we find that the Malaysian banking sector has exhibited a higher total factor productivity level during the post-merger period. The empirical findings from the multivariate regression analysis suggest that income diversification and operating expenses are positively and significantly related to Malaysian banks total factor productivity, whereas credit risk exhibits negative relationship.

Keywords: mergers; acquisitions; M&A; MPI; Malmquist productivity index; stepwise regression analysis; Malaysia; total factor productivity; bank productivity; banking; income diversification; operating expenses; credit risk.

DOI: 10.1504/WREMSD.2009.031628

World Review of Entrepreneurship, Management and Sustainable Development, 2009 Vol.5 No.4, pp.407 - 427

Published online: 15 Feb 2010 *

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