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Efficiency in pre-merger and post-merger non-bank financial institutions

Worthington, Andrew C. (2001) Efficiency in pre-merger and post-merger non-bank financial institutions. Managerial and Decision Economics, 22(8), pp. 439-452.

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Abstract

A two-part process is employed to analyse the role of efficiency in merger and acquisition (M&A) activity in Australian credit unions during the period 1993 to 1997. The measures of efficiency are derived using the nonparametric technique of data envelopment analysis. The first part uses panel data in the probit model to relate pure technical efficiency, along with other managerial, regulatory and financial factors, to the probability of merger activity, either as an acquiring or acquired entity. The results indicate that loan portfolio diversification, management ability, earnings and asset size are a significant influence on the probability of acquisition, though the primary determinant of being acquired is smaller asset size. The second part uses a tobit model adapted to a panel framework to analyse post-merger efficiency. Mergers appear to have improved both pure technical efficiency and scale efficiency in the credit union industry.

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ID Code: 2575
Item Type: Journal Article
Keywords: Data envelopment analysis, mergers, credit unions, technical and scale efficiency
DOI: 10.1002/mde.1033
ISSN: 0143-6570
Subjects: Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > ECONOMETRICS (140300) > Econometric and Statistical Methods (140302)
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BANKING FINANCE AND INVESTMENT (150200) > Financial Institutions (incl. Banking) (150203)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Copyright Owner: Copyright 2001 John Wiley & Sons
Copyright Statement: The definite version is available on publication at www3.interscience.wiley.com
Deposited On: 18 Nov 2005
Last Modified: 05 Jan 2011 23:25

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