Back Issues 11-20

PRE-MERGER EFFICIENCY ASSESSMENTS IN THE TAIWAN BANK INDUSTRY- APPLICATION OF DYNAMIC SBM DEA

Hsu, Shao-Yin

Department of Accounting, Ming Chuan University

Address: 250, Zhong Shan N. Rd., Sec 5, Taipei 111, Taiwan (R.O.C.)

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Ma, Chia-Ying

Department of Accounting, Soochow University

Address: 56, Kueiyang St., Sec. 1, Taipei, 10048, Taiwan (R.O.C.)

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Abstract

This study used dynamic data envelopment analysis (DEA) to determine whether theoretical merger and acquisitions (M&As) among 33 banks in Taiwan would have presented potential gains. The empirical results of this study show that potential merger efficiency effects can be positive or negative. Mergers do not guarantee potential gains. Individual banks with the poorest efficiency can increase their operating efficiency via mergers and have the best potential gains, which means that banks can derive improvements in economies of scope via mergers by increasing income diversity.

Keywords: bank, efficiency, DEA, merger potential gains.