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Title:	Merger, efficiency and competition in Malaysian banking industry
Authors:	Rossazana Ab. Rahim (P38798)
Supervisor:	Nor Ghani Md. Nor, Prof. Dr.
Keywords:	Merger in Malaysian banking industry Efficiency in Malaysian banking industry Competition in Malaysian banking industry Malaysian banking Malaysia Banks and banking--Malaysia
Issue Date:	18-Aug-2011
Description:	Past efficiency studies on bank mergers had tended to focus only on those that were motivated by market incentives. The 1999 wave of bank mergers in Malaysia offered a unique opportunity to look into the efficiency effect of bank mergers that were not market-driven. The mergers were largely involuntary following a directive by Bank Negara Malaysia for several groups of banks to merge as single entities. There was also some concern that previous studies had been methodologically unsound by estimating separate frontiers for the pre and post merger periods. The first objective of this study is to quantify the impact of the involuntary merger on cost efficiency over the 1995-2005 periods while the second objective is to analyze the link between efficiency and competition. Using Data Envelopment Analysis (DEA) method, the data set was enveloped through a common frontier and separate frontiers approaches by decomposing cost efficiency into technical, pure technical, scale, cost and allocative efficiencies. Standard parametric (t-tests) and non-parametric tests (Wilcoxon Rank-Sum, Kruskal��Wallis, Mann-Whitney and Kolmogorov��Smirnov tests) were then performed to determine the statistical significance of the results. The results of the tests rejected the hypothesis that the pre and post merger data come from the same population; thus, a common frontier approach was adopted. A set of environmental variables which comprises risk (the ratio of total loans over total assets), size (proxied by total assets), economic growth (represented by gross domestic products) and two dummy variables (government ownership and the merger year) are regressed on each type of cost efficiency using Tobit regression. To overcome the inherent dependency problem of DEA efficiency scores in the regression analysis, a bootstrapping technique was also applied. In general, the results suggest that the enforcement of the merger policy had resulted in an improvement of bank efficiency levels. Causality tests between competition and various measures of efficiency were undertaken to achieve the second objective. The Granger causality tests indicated a positive effect of competition on technical efficiency, pure technical efficiency and scale efficiency. However, the sign was reversed in the case of cost efficiency and allocative efficiency. In addition, a negative causality running from efficiency to competition was also found in all types of efficiency except one (pure technical efficiency case).,PhD
Pages:	224
Call Number:	HG3300.6.A6 .R683 2011
Publisher:	UKM, Bangi
Appears in Collections:	Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan

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