Effects of Japanese Bank M&As: malmquist efficiency, management index approach

Abstract

Japanese financial worlds are under the serious restructuring situations because the market does not send the positive signal for the delayed improvement plans by the government. Because of the crash of the bubbles, the low stock prices, huge budget deficit, and the economic deflation, especially banking side has been affected directly by those shocks. The one of the responses of those situations by the Japanese banks is M&As among the banks. It makes mega banks and give competition power for the struggle for existence from the threat by the American and European banks. The purpose of this paper is to examine the following two things: First, by using Malqumist index method, The productive efficiency of 25 Japanese banks from 1966 to I 998( 25 years: 1966-1975, 1984-1998) is examined for measuring the effects of bank M&A on efficiency, management index. Second, we compare the change of management index before and after bank M&A. Followings are the principal cases of Japanese bank M&As during 1966-1998. First, Mitsui Bank absorbed the Doutou Bank on April I, 1968. Second, Nihokankyo Bank and Daiichi Bank made DaiichiKankyo Ban~ on October, 1, 1971. Third, Kobe Bank and Daiyou Bank made DaiyouKobe Bank on October 1, 1973. Fourth, Sumitomo Bank absorbed the Heika Shoko Bank on October 1, 1986. Fifth, Mitsui Bank and Daiyou Kobe Bank made DaiyouKobeMitsui Bank on April 1, 1990. Sixth, Kyoka Bank and Saidama Bank made KyokaSaidama Bank on April I, 1991.Seventh, Mitsubishi Bank and Tokyo Bank made TokyoMitsubishi Bank on April 1, 1996.