بهره وری و اثر بهره وری ادغام بانک ها: شواهدی از صنعت بانکداری یونانی
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|18280||2008||19 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Economic Modelling, Volume 25, Issue 2, March 2008, Pages 236–254
The main purpose of this study is to investigate the effect of acquisition activity on the efficiency and total factor productivity of Greek banks. A stochastic output distance function is used to construct a generalized output Malmquist productivity index based on the methodological framework of Orea [Orea, L., 2002. Parametric decomposition of a Generalized Malmquist Productivity Index. Journal of Productivity Analysis 18, 5–22]. The results of the present study indicate that the effects of mergers and acquisition on technical efficiency and total factor productivity growth of Greek banks are rather negative. In particular, the technical efficiency of merger banks decreased in the period after merging, while that of non-merger banks increased over the same period. Furthermore the decrease in total factor productivity for merger banks for the period after merging can be attributed to an increase in technical inefficiency and the disappearance of economies of scale, while technical change remained unchanged compared to the pre-merging level.
In the last decade banking systems have displayed very high rates of consolidation via mergers and acquisitions (M&As) among different countries and regulatory environments around the world (see Group of Ten, 2001, pp. 31–42). The main causes for this unprecedented wave of M&As, which are common to most countries, are the deregulation and integration of financial markets as well as technological innovations and the development of new IT systems. These reasons led to sharper competition among banks by cutting costs and expanding size mainly via M&As. Horizontal (in-market) mergers are largely justified on efficiency grounds even though the empirical evidence on the outcomes of mergers is generally ambiguous (e.g. Berger, 1998, Vander Vennet, 1996, Rhoades, 1998, Rhoades, 1993 and Berger and Humphrey, 1992). Until the mid-1980s, the Greek banking industry operated in an environment heavily controlled and regulated by the Bank of Greece. In particular, the Bank of Greece and two major state-owned banks, the National Bank of Greece and the Commercial Bank of Greece, almost completely dominated the banking industry. As a result, banks abstained from adopting advanced technology due to the absence of competition in the industry. Towards the end of the 1980s, the industry gradually moved towards a more deregulated system due to international developments and the need to participate in the Single European Market and European Monetary Union (EMU). In the 1990s, the Greek banking industry was affected by the harmonization of national regulations within the European Union (EU) and mainly by the enactment of the Second Banking Directive in 1992, which sought to facilitate the liberalization of financial markets and to enable banks and other financial institutions to operate throughout the EU under a single banking license. Thus, among the main factors behind the M&A activity in the Greek banking sector during the second half of the 1990s were the country's forthcoming accession into EMU and the possible decrease in income this would cause, stronger competition in the domestic market and potential competition from foreign banks and the introduction and advancement of new technology. The purpose of this paper is to examine the impact of M&As on the technical efficiency and total factor productivity of the Greek banking sector during the period 1993–2004. The data set consists of ten individual banks of whome five are engaged in merger activity and the other five, non-merger banks, constitute the control group. Thus, comparisons can be made between the groups of merger and non-merger banks as well as within the group of merger banks before and after merging. In other words this paper examines whether merged banks are more or less efficient and productive than non-merged banks and, more importantly, whether merged banks are changing their efficiency and productivity levels after merging. The translog output distance function is used to construct a generalized Malmquist productivity index, based on the methodological framework of Orea (2002), to investigate the impact of M&As on the components of the productivity index. It is worth stating, that the study by Balk (2001) presents the first parametric approach which uses an output-oriented translog distance function with variable returns to scale, and generalizing the results obtained by Ray (1998), extends the traditional Malmquist productivity index (which only captures technical change and technical efficiency change) so that scale economies are taken into account. Balk's (2001) methodology, however, appears to have some problems in the case of either globally increasing, decreasing, or constant returns to scale technologies or of ray-homogeneous technologies. Orea's (2002) methodological procedure, used in the present study, exploits Diewert's (1976) Quadratic Identity Lemma and estimating a translog distance function with variable returns to scale constructs a generalized Malmquist productivity index which takes into account scale economies and overcomes the practical problems that may appear in Balk's (2001) approach. There are several ways in which M&As can improve bank performance. One of the most important ways is that through M&As banks can attain operational synergies. The attainment of these synergies via bank M&As depends on the realization of economies of scale and scope. Economies of scale may arise because consolidated banks may achieve control of cost-saving technologies or spread their fixed cost over a larger volume of output, thus reducing average cost and increasing efficiency. Economies of scope may arise because merging banks enter new markets and cross-sell their products to existing customers. Empirical studies for US banks depict that scale economies are exhausted at fairly low levels of output ( Clark, 1988 and Peristiani, 1997), and such economies cease to exist or become negative for very large banks ( Hunter and Timmer, 1995). Furthermore, the study by Berger and Humphrey (1992) indicates that when scale economies are present their measured effect is small and several studies such as Berger and Humphrey (1992) and Miller and Noulas (1996) argue that X-inefficiency may dominate scale and product mix. In general, the banking production literature seems to argue that while M&As have some limited potential to increase performance through scale and scope economies, whether these gains are captured depends on controlling technical inefficiency ( Haynes and Thompson, 1999). For Europe, there is evidence of scale economies both for very small banks and medium-sized banks ( Altunbas et al., 2001) and as the studies by Vander Vennet (1996, 1994) indicate there may be potential efficiency gains from mergers between small and medium-sized European credit institutions due to scale economies. In addition to any effects of operational synergies per se, as the study by Haynes and Thompson (1999) indicates, bank M&As may have a potential impact on bank performance via one of the three following ways: first, via the selective redeployment of assets, i.e. horizontal mergers could generate savings as output is reassigned to more productive capital ( Dutz, 1989); second, via the transfer of asset control to better quality managers ( Thompson, 1997); and third, via the renegotiation of implicit labor contracts ( Shleifer and Summers, 1988). However, the extent to which the aforementioned gains could be exploited via bank M&As might be elusive in large, complex institutions. The banking literature (e.g. Vander Vennet, 1996, Resti, 1998 and Amel et al., 2004) provides three additional motives for bank M&As which are not justified on efficiency grounds. The first is related to the management-utility maximization hypothesis and the other two are related to the too-big-to fail (TBTF) and the market power arguments. With regard to the management-utility maximization hypothesis, managers channel expenditures based on their private preferences and for this reason they might seek to increase the size of their institutions via M&As so as to increase their perquisites, prestige, power and salary levels. Furthermore, as the size of the bank increases the TBTF argument comes into effect because the concern about the demise of a particular bank increases as the size of that bank increases. The third argument indicates that banks via M&As aim to obtain market power in order to exploit quasi-monopoly profits. According to Vander Vennet (1994) the market power motive of M&As can better characterize EU banks because they are organized as a system of national oligopolies. Thus, consolidation may increase the market power of EU banks and strengthen their competitive position on their home markets. Unfortunately, there are only two empirical studies on the performance impact of mergers in the Greek banking sector. The first is the study by Athanasoglou and Brissimis (2004) which examines the effect of M&As in Greek banking on the cost and profit efficiency and on economies of scale by using financial indicators. The results of this study show an improvement in cost and, in particular, profit efficiency between the pre-merger period (1994–1997) and the post-merger one (2000–2002). With regard to economies of scale, the study indicates that the post-merger period is characterized by the presence of economies of scale throughout the whole size range of Greek banks as opposed to the pre-merger period where economies of scale were found only in small to medium-sized banks, with large banks experiencing negative economies of scale. The second is the study by Mylonidis and Kelnikola (2005) which uses financial indicators to investigate whether profit, operating efficiency and labor productivity ratios improved after the mergers of the period 1999–2000. The results indicate that the aforementioned financial ratios do not improve but when compared with the corresponding ratios of non-merging banks the result show that mergers had a positive impact on performance. The present paper is the first study to investigate the impact of M&As on technical efficiency and total factor productivity of the Greek banking sector using a stochastic output distance function approach. Unlike the two aforementioned studies on the performance impact of mergers in the Greek banking, i.e. Athanasoglou and Brissimis (2004) and Mylonidis and Kelnikola (2005), which use financial performance ratios, the stochastic output distance function approach used here has the advantage that it uses variables corresponding to real output and real inputs in the production process. Therefore, as Haynes and Thompson (1999) indicate, it avoids contamination from extensive expenditures associated with post-merger changes such as compensation payments to factors suppliers whose inputs are no longer required in the production process. Moreover, the approach used in the present paper takes into account the regulatory and/or competitive environment in which the banks operate. It is worth stating that the studies by Cuesta and Orea (2002, pp. 2233–2234) and Orea (2002, pp. 13–14) present the advantages for using the stochastic output distance function approach in estimating technical efficiency in the banking industry. In short, among the main advantages of this approach is that it is closely related to technical efficiency and accommodates the multi-product nature of the financial sector using only data on quantities. The decomposition of the generalized Malmquist productivity index into its components (i.e. technical change, technical efficiency change and scale economies), presented in this study, allows the possibility of investigating the potential effect of mergers on each one of these components as well as the contribution of each one of these components to any change in total factor productivity. Furthermore, this study is one of the few studies in the international banking literature investigating the effect of mergers on total factor productivity. Among them are the study by Haynes and Thompson (1999) which investigates the impact of acquisition activity on the productivity of the UK building society sector and the study by Orea (2002) which investigates the effect of mergers on the total factor productivity of Spanish saving banks. The first of the aforementioned studies uses the generalized Cobb–Douglas production function approach while the second uses Orea's (2002) generalized Malmquist productivity index. The remainder of the paper is organized as follows: Section 2 outlines the methodological framework. The empirical model is presented in Section 3. Section 4 describes the data. The empirical results are presented in Section 5. Finally, Section 6 concludes.
نتیجه گیری انگلیسی
This paper uses the methodological framework of Orea (2002) to investigate the impact of M&As on technical efficiency and total factor productivity of the Greek banking sector during the period 1993–2004. Orea's (2002) methodological framework estimates a stochastic output distance function to construct a generalized Malmquist productivity index which can be decomposed into technical efficiency change, technical change and economies of scale components. The main conclusions of the present study indicate that banks that participated in merging activity experienced a decline in technical efficiency and in total factor productivity. In particular, the average technical efficiency of merged banks decreased by 15% while that of non-merged banks had an increase of about 8.52%. Furthermore, total factor productivity change for merger banks decreased from about 3.17% for years before merging to about 0.63% for years after merging, while that of non-merger banks grew at an average growth rate of about 2.08% per year. Note that the decrease of the total factor productivity for merger banks for the period after merging is attributed to the negative effect of the increase in technical inefficiency (− 0.13%) and to the disappearance of economies of scale (0.0%), while technical change remained unchanged (0.76%) to the pre-merger level. The findings of the present study are in accordance with the bulk of banking literature, which indicates that banks participated in merging activity did not experience an improvement in performance. It should be noted, however, that these findings might be due to a short post-merger period, which might fail to account for possible efficiency gains due to M&As, because these gains come in full after some time.