A Study the Performance of Banks in Taiwan after Merger and Acquisition

• Main Authors: hu shu jhen, 胡淑偵
• Other Authors: ou ren he
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/92471779973742199962

碩士 === 亞洲大學 === 經營管理學系碩士班 === 95 === In an international environment where we see increasingly free competition, the financial institutions compete fiercely. These institutions sometimes obtain the competitive advantages and the control over the market channels through mergers and acquisitions (M&A). Harford (2005) found that M&A trend could be categorized into company economy, management and technology, timing to enter a market, or industry shake-up. M&A also catalyzes the transformation of the new environment. M&A is the indication of market competitiveness; nevertheless, is it also the indication of improved management performance? In order to investigate whether M&A is beneficial to a bank’s future development and whether the operating performance of a post-M&A bank does improve, this study utilizes Data Envelopment Analysis (DEA) and conducts empirical study on 12 banks that underwent M&A since 2003. The input variables chosen include interest expenses, operating expenses, fixed assets; the out put variables include interest income, operating profit, and pre-tax income. The purpose of this study is to find out whether the process of M&A improves the banks’ performance. If the banks’ performance does not improve, we would look for the sources of ineffectiveness and provide our findings as recommendation to the ineffectively-operated banks. We also seek possible approaches to rectify the ineffective input or output. Our analysis demonstrates that when the bank’s overall effectiveness is one, which means the bank reaches its operating scale, it has a relatively effective operation compared to other banks. When the bank’s overall effectiveness is not one, its operation is not as effective as those of other banks. We also find out, from the study of the overall effectiveness, that even though some banks reach their optimal operating scale, their overall effectiveness is not at its prime because their general operating method could still be improved. Due to the difficulty to obtain extensive empirical data, this study evaluates only 12 banks. It is advised that the future studies increase the number of banks studied, incorporate more variable indicators, and find out the optimal combination of the input and output items. The output-driven approach, i.e., how to utilize the minimal existing input to generate the maximum output, is also recommended.