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https://epub.vgu.edu.vn/handle/dlibvgu/1212| Title: | Evaluating bank mergers' rationale in Vietnam and their post-merger performance using data envelopment analysis | Authors: | Ho Vy Hung | Keywords: | Data envelopment analysis;Bank efficiency;Merger motivation | Issue Date: | 2021 | Publisher: | Vietnamese-German University | Abstract: | This study examined the various merger motivations of domestic commercial banks during the period 2010-2019 and evaluated whether the results of bank mergers have satisfied the initial motivations. We examined six bank merger cases involving domestic commercial banks and their performances in post-merger periods. In contrast with past research, our paper focused on determining the specific merger motivation of the merging banks involved and evaluated whether their post-merger performances justify the merger decisions using data envelopment analysis (DEA). Through the summaries of merger proposals that were published in the merging banks annual general meetings, we observed that there were two main merger motivations in the Vietnamese banking sector during this period: expansion motivation and restructuring motivation. While the former motivation was about expanding the merging entitys market power, cost efficiency, and enhancing diversification, the latter motivation was more focused on resolving non-performing loans that have been accumulated in prior years. We then identified three suitable approaches for each merger motivation: profit-oriented intermediation approach and production approach for expansion motivation, restructuring approach for restructuring motivation. Each approach has its input-output specifications that were used to determine whether the merger outcomes had satisfied the merger motivations. The results showed that 3 out of 6 merger cases were successful in fulfilling their merger motivations whereas the remaining cases were either mixed or yielding poor results. Bank mergers were found to be especially effective at supporting restructuring drive, as indicated by the successes found in cases that have restructuring motivation. However, the results for expansion motivation were mostly inconsistent and inadequate. The merger outcomes provided useful insights for policy makers and bank managers. Policy makers should view bank merger as an important tool in managing and facilitating the restructuring process of the banking sector. Furthermore, bank managers should either consider other strategic alternatives to merger or plan the post-merger integration carefully, since it is likely that the merger would not fulfill the traditional value-maximizing motivations. |
URI(1): | http://epub.vgu.edu.vn/handle/dlibvgu/1212 | Rights: | Attribution-NonCommercial 4.0 International |
| Appears in Collections: | Finance & Accounting (FA) |
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| Evaluating bank mergers' rationale in Vietnam and their post-merger performance using data envelopment analysis.pdf | 1.15 MB | Adobe PDF |
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