The cost efficiency effects of involuntary bank mergers : empirical evidence from Malaysia

Rossazana, Ab. Rahim and Nor Ghani, Md-Nor and Shamsubaridah, Ramlee (2012) The cost efficiency effects of involuntary bank mergers : empirical evidence from Malaysia. Thammasat Economic Journal, 30 (1). ISSN 1685-3008

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Abstract

Much of the merger and banking efficiency studies is centered on the market driven or voluntary merger. Thus, the uniqueness of Malaysian merger policy offers an interesting platform for this study to embark on. The merger in Malaysia is unique as all the domestic banks were enforced to merge by the government in year 1999 after years of persuasion with little success. This study attempts to quantify the impact of the involuntary merger on the cost efficiency gains over the 1990-2005 periods. Firstly, several tests have been performed to investigate whether it is best to envelope data with a common frontier of data envelopment analysis (DEA) or by separate frontiers. Secondly, this paper assesses the cost,allocative, technical, pure technical and scale efficiencies of Malaysian banking industry as the results of the merger. In general, the results suggest that the enforcement of the bank merger policy has resulted in an improvement of bank efficiency levels.

Item Type: Article
Uncontrolled Keywords: Universiti Malaysia Sarawak, UNIMAS, 2012, involuntary mergers, efficiency, banking, Malaysia
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 20 Mar 2014 03:49
Last Modified: 31 Oct 2017 03:46
URI: http://ir.unimas.my/id/eprint/1272

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