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Effects of bank mergers on concentration and efficiency of the venezuelan banking system, 1998-2005

Author

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  • Ruth Guillén

    (Profesora Asistente. Departamento de Economía e Instituto de Investigaciones Económicas y Sociales, Universidad de Los Andes (ULA). Núcleo Universitario Liria, Edif. G. Piso 3. Mérida-Venezuela.)

  • Bernarda Pinilla

    (Profesora Titular. Departamento de Economía, Universidad de Los Andes. Núcleo Universitario Liria, Edif. H. Piso 3. Mérida-Venezuela.)

Abstract

This paper analyzes the relation between bank mergers and changes in the concentration and efficiency of the Venezuelan Banking System during the period 1998-2005. Efficiency was estimated through a stochastic cost frontier model. The concentration was measured by deposits and considering the four-firm concentration ratio. The research found evidences that support the idea that mergers are associated with concentration increases. However, the stochastic costs frontier model suggested that banking mergers did not produce efficiency increases; on the contrary, the merged banks were less efficient than non-merged banks.

Suggested Citation

  • Ruth Guillén & Bernarda Pinilla, 2010. "Effects of bank mergers on concentration and efficiency of the venezuelan banking system, 1998-2005," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 35(30), pages 103-142, july-dece.
    • Handle: RePEc:ula:econom:v:35:y:2010:i:30:p:103-142
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank mergers; concentration; efficiency; stochastic cost frontier.;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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