Estimating the degree of operating efficiency gains from a potential bank merger and acquisition: A DEA bootstrapped approach

✍ Scribed by Halkos, George E.; Tzeremes, Nickolaos G.

• Book ID: 120363520
• Publisher: Elsevier Science
• Year: 2013
• Tongue: English
• Weight: 431 KB
• Volume: 37
• Category: Article
• ISSN: 0378-4266
• DOI: 10.1016/j.jbankfin.2012.12.009

✦ Synopsis

We propose a bootstrapped Data Envelopment Analysis (DEA)-based procedure to pre-calculate and preevaluate the short-run operating efficiency gains of a potential bank merger or acquisition (M&A). As an illustrative example, we apply our proposed procedure to investigate the degree of operating efficiency gains of 45 possible bank M&As in the Greek banking industry over the period from 2007 to 2011. The results reveal that a year before and a year after the initiation of the Greek fiscal crisis, the majority of the potential bank M&As under examination were unable to generate short-run operating efficiency gains. In addition, our results for 2011 indicate that the majority of bank M&As can lead to short-run operating efficiency gains. Finally, the empirical findings support the view that a merger or acquisition between efficient banks does not ensure an efficient bank M&A.