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Domestic mergers in the Austrian banking sector: a performance analysis

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  • Franz Hahn

Abstract

In this paper we investigate the performance of the Austrian banks which have participated in a domestic in-market merger operation since 1996. For this purpose we apply the Data Envelopment Analysis (DEA) methodology in combination with a Tobit model to account for the variation of the productive efficiency scores due to external determinants such as in-market merger operations. In order to cope with the problem of selectivity we estimate the model subject to the presence (or absence) of a treatment effect as encompassed by the participation in in-market merger activities. The dataset used comprises an unbalanced panel of data of about 800 Austrian banks ranging over 1996 to 2002. The paper finds evidence supporting the view that banks which participated in domestic in-market merger operations attain a higher productive efficiency level than banks which did not participate in such operations. The analysis also indicates that the merger gains remain significant over a longer period of time (more than five years) but show a slight tendency to level off.

Suggested Citation

  • Franz Hahn, 2007. "Domestic mergers in the Austrian banking sector: a performance analysis," Applied Financial Economics, Taylor & Francis Journals, vol. 17(3), pages 185-196.
    • Handle: RePEc:taf:apfiec:v:17:y:2007:i:3:p:185-196
    DOI: 10.1080/09603100601043706
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    References listed on IDEAS

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    1. H.P. Huizinga & J.H.M. Nelissen & R. Vander Vennet, 2001. "Efficiency Effects of Bank Mergers and Acquisitions," Tinbergen Institute Discussion Papers 01-088/3, Tinbergen Institute.
    2. Mei Xue & Patrick T. Harker, 1999. "Overcoming the Inherent Dependency of DEA Efficiency Scores: A Bootstrap Approach," Center for Financial Institutions Working Papers 99-17, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    4. Franz R. Hahn, 2004. "Measuring Performance. A Multiple-Stage Approach," WIFO Working Papers 228, WIFO.
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    Cited by:

    1. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499.
    2. Chih-Ching Yang, 2014. "An enhanced DEA model for decomposition of technical efficiency in banking," Annals of Operations Research, Springer, vol. 214(1), pages 167-185, March.
    3. Stefano Caiazza & Alberto Franco Pozzolo & Giovanni Trovato, 2014. "Do domestic and cross-border M&As differ? Cross-country evidence from the banking sector," Applied Financial Economics, Taylor & Francis Journals, vol. 24(14), pages 967-981, July.
    4. Fadzlan Sufian & Fakarudin Kamarudin, 2017. "Forced Mergers on Bank Efficiency and Productivity: Evidence from Semi-parametric Malmquist Productivity Index," Global Business Review, International Management Institute, vol. 18(1), pages 19-44, February.
    5. Franz R. Hahn & Werner Hölzl, 2012. "Effects of the New Capital Requirements of Basel III on the Financing of Small and Medium-sized Enterprises in Austria," Austrian Economic Quarterly, WIFO, vol. 17(3), pages 168-186, August.
    6. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    7. Franz R. Hahn & Werner Hölzl, 2011. "Auswirkungen von Basel III auf die Finanzierung kleiner und mittlerer Unternehmen in Österreich," WIFO Studies, WIFO, number 43813.
    8. Peter Egger & Franz R. Hahn, 2006. "Endogenous Bank Mergers and Their Impact on Banking Performance," WIFO Working Papers 271, WIFO.
    9. Özlem O. Akdeniz & Hussein A. Abdou & Ali I. Hayek & Jacinta C. Nwachukwu & Ahmed A. Elamer & Chris Pyke, 2024. "Technical efficiency in banks: a review of methods, recent innovations and future research agenda," Review of Managerial Science, Springer, vol. 18(11), pages 3395-3456, November.

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