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The impact of forced mergers and acquisitions on banks’ total factor productivity: empirical evidence from Malaysia

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  • Fadzlan Sufian
  • Muzafar Shah Habibullah

Abstract

In the present paper, we employ alternative techniques to examine the impact of mergers and acquisitions on the total factor productivity of Malaysian banks. These alternative techniques extend from the use of non-parametric ‘frontier’-oriented Malmquist productivity index (MPI) and central tendency ordinary least square (OLS) and fixed effects (FE) panel regression methods. We find that Malaysian banks have exhibited a higher mean total factor productivity level during the post-merger period. The results from the multivariate regression analysis suggest that income diversification and operating expenses are positively and significantly related to Malaysian banks’ total factor productivity, while credit risk and inflation exhibit a negative relationship. The empirical findings indicate that the acquiring banks have been relatively more productive compared to the target banks and banks in the control group.

Suggested Citation

  • Fadzlan Sufian & Muzafar Shah Habibullah, 2014. "The impact of forced mergers and acquisitions on banks’ total factor productivity: empirical evidence from Malaysia," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(1), pages 151-185, January.
    • Handle: RePEc:taf:rjapxx:v:19:y:2014:i:1:p:151-185
    DOI: 10.1080/13547860.2013.818428
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    Cited by:

    1. Ullah, Nazim, 2022. "The Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking sector," MPRA Paper 118682, University Library of Munich, Germany.
    2. Hafezali Iqbal Hussain & Katarzyna Szczepanska-Woszczyna & Fakarudin Kamarudin & Nazratul Aina Mohamad Anwar & Mohd Haizam Mohd Saudi, 2021. "Unboxing the black box on the dimensions of social globalisation and the efficiency of microfinance institutions in Asia," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 557-592, September.
    3. Ullah, Nazim & Uddin, Akther, 2018. "Will financial distress lead to banks Merger and Acquisition in Bangladesh?," MPRA Paper 108576, University Library of Munich, Germany, revised 01 Jan 2018.
    4. Ullah, Nazim & Abu Seman, Junaidah, 2018. "Merger and Acquisition in Banking Sector: A Review of the Literature," MPRA Paper 108575, University Library of Munich, Germany, revised 01 Jan 2018.
    5. Mohd Alsaleh & A.S. Abdul-Rahim & H.O. Mohd-Shahwahid & Lee Chin & Fakarudin Kamarudin, 2016. "An Empirical Analysis for Technical Efficiency of Bioenergy Industry in EU28 Region Based on Data Envelopment Analysis Method," International Journal of Energy Economics and Policy, Econjournals, vol. 6(2), pages 290-304.
    6. Wahida Ahmad & David Prentice, 2023. "How Large Are Productivity Differences Between Islamic And Conventional Banks?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(05), pages 1651-1670, September.
    7. Ahmad Majid Ahmad Nasser Lootah & Hussein A. Hassan Al Tamimi & Panagiotis D. Zervopoulos, 2024. "Assessing the Impact of M&As’ Motives Influencing the M&A Decision Making Process in the UAE Banking Sector," International Journal of Economics and Financial Issues, Econjournals, vol. 14(3), pages 192-205, May.

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