The efficiency effects of mergers and Acquisitions in Malaysian banking institutions

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This paper analyses the efficiency and financial performance using CAMEL-type variables, three years before and after the consolidation programme for the domestic banking sector initiated by Bank Negara as a result of the 1997 financial crisis. The results suggest that the mergers did not seem to enhance the productive efficiency of the banks as they do not indicate any significant difference. The financial performance suggests that the banks are becoming more focussed on their intermediation activities to generate high net interest income. However, due to their conservative loan loss reserve policies and cost inefficiencies after the merger, it has somehow resulted in the loan growth and interest earning ratio variable giving a negative impact on ROE.

Original languageEnglish
Pages (from-to)47-66
Number of pages20
JournalAsian Journal of Business and Accounting
Volume1
Issue number1
Publication statusPublished - 2008

Fingerprint

Mergers and acquisitions
Banking
Loans
Mergers
Financial performance
Intermediation
Income
Banking sector
Cost inefficiency
Financial crisis
Consolidation
Productive efficiency

Keywords

  • Bank mergers
  • CAMEL variables
  • Data envelopment analysis
  • Efficiency
  • Performance

ASJC Scopus subject areas

  • Accounting
  • Business and International Management

Cite this

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title = "The efficiency effects of mergers and Acquisitions in Malaysian banking institutions",
abstract = "This paper analyses the efficiency and financial performance using CAMEL-type variables, three years before and after the consolidation programme for the domestic banking sector initiated by Bank Negara as a result of the 1997 financial crisis. The results suggest that the mergers did not seem to enhance the productive efficiency of the banks as they do not indicate any significant difference. The financial performance suggests that the banks are becoming more focussed on their intermediation activities to generate high net interest income. However, due to their conservative loan loss reserve policies and cost inefficiencies after the merger, it has somehow resulted in the loan growth and interest earning ratio variable giving a negative impact on ROE.",
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