Title: Effects of total factor productivity on bank acquisitions prediction: 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: 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.

Keywords: company mergers; business acquisitions; total factor productivity; Malmquist productivity index; Malaysia; banks; banking; parametric univariate tests; non-parametric univariate tests; bank acquisitions; acquisitions prediction.

DOI: 10.1504/IJBIR.2010.032384

International Journal of Business Innovation and Research, 2010 Vol.4 No.3, pp.210 - 231

Published online: 02 Apr 2010 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article