Open AccessThe efficiency effects of bank mergers: An analysis of case studies in Vietnam
Author(s) -
Tu Le
Publication year - 2017
Publication title -
risk governance and control: financial markets and institutions
Language(s) - English
Resource type - Journals
eISSN - 2077-4303
pISSN - 2077-429X
DOI - 10.22495/rgcv7i1art8
Subject(s) - data envelopment analysis , vietnamese , business , stock (firearms) , efficiency , financial system , financial crisis , loan , mergers and acquisitions , scale (ratio) , monetary economics , industrial organization , economics , finance , macroeconomics , engineering , mechanical engineering , mathematical optimization , philosophy , linguistics , physics , mathematics , quantum mechanics , statistics , estimator
This paper employs Data Envelopment Analysis to examine the relative efficiency for Vietnamese banks from 2008 to 2015. Efficiency level is relatively high and remains stable over the examined period, suggesting the banking system is less affected by the global financial crisis. More specifically, technical efficiency and scale efficiency in Vietnamese banking is examined when controlling for problem loans. We suggest that controlling for the exogenous impact of problem loans is important for joint-stock banks. Furthermore, our results do not support the hypothesis that acquiring banks are more efficient than the acquired banks. The efficiency improved in majority of merger cases and was not related to acquiring bank’s efficiency advantage over its targets. Small-and medium- banks should be promoted in future acquisitions as a means to enjoying efficiency gains. Finally, there are mixed results on the extent to which the benefits of efficiency gains are passed on to the public.