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Efficiency of Indian Commercial Banks: The Post-Reform Experience from Mergers & Acquisitions

Author

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  • Bhattacharyya, Surajit
  • Chatri, Ankit

Abstract

This paper explores the impact of M&A on technical efficiency of Indian commercial banks during the second decade of reforms. We use DEA to compute the relative technical efficiency of banks that participated in M&A activities. The technical efficiency is computed under both 'common' and 'separate' frontier with the assumption of 'constant' as well as 'variable' returns to scale. We also compare the post-amalgamation efficiency scores of the participating banks with that of a control group comprising of such banks that did not undergo any consolidation since 1991. Our results indicate evidence of efficiency gains for the merging and/or acquiring banks. At the same time there are banks that have experienced deterioration in their post-M&A average efficiency levels.

Suggested Citation

  • Bhattacharyya, Surajit & Chatri, Ankit, 2012. "Efficiency of Indian Commercial Banks: The Post-Reform Experience from Mergers & Acquisitions," MPRA Paper 39299, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39299
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    References listed on IDEAS

    as
    1. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    2. Bhattacharyya, Arunava & Lovell, C. A. K. & Sahay, Pankaj, 1997. "The impact of liberalization on the productive efficiency of Indian commercial banks," European Journal of Operational Research, Elsevier, vol. 98(2), pages 332-345, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Commercial Banking; DEA; Technical Efficiency; Control Group;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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