The Effects of Cross-Border Bank Mergers and Acquisitions on the Productivity of Credit Institutions

• Published in: Cross-Cultural management journal Vol. XVI; no. 1; pp. 157 - 167
• Main Authors: Popovici, Andreea, Turliuc , Dragos Gabriel
• Format: Journal Article
• Language: English
• Published: Iași Fundatia Română pentru Inteligenta Afacerii 01.01.2014; Romanian Foundation for Business Intelligence
• Subjects: Bank acquisitions & mergers; banking; Banking industry; Cross border transactions; Cross cultural management; Economy; efficiency; M-A; Productivity; Austria; Romania; Slovakia; Productivity; MA; Performance; Efficiency; Banking
• ISSN: 2286-0452

The purpose of the current research is to study bank mergers and acquisitions (MA) and to see whether they have implications on the productivity of the target banks, and also for the bidder bank. The aim of this paper is to see if, during 2002-2008 period, three banks from the European banking system, Banca Comerciala Romana from Romania, Slovenská sporiteľňa from Slovakia and Erste Bank Group from Austria improved their productivity due to the fact that all of them were involved in a process of cross-border merger or acquisitions, even if the bank is the purchaser or the target. To reach our goal, we used DEA method, by estimating the productivity achieved by these three banks during the period pre-MA, post MA, but we also estimated the productivity for entire period of seven years. Using Malquist DEA method, we show that, on average, the merger or acquisition in which a bank was involved improved the Total Factor Productivity of all analyzed banks.