THE EFFICIENCY EFFECTS OF BANK MERGERS: AN ANALYSIS OF CASE STUDIES IN VIETNAM

Tu DQ Le*

* School of Accounting, Banking and Finance, University of Canberra, ACT, Australia
Center for Economic and Financial Research, University of Economics and Law, Ho Chi Minh City, Vietnam

Abstract

This paper employs Data Envelopment Analysis to examine the relative efficiency for Vietnamese banks from 2008 to 2015. Efficiency level is relatively high and remains stable over the examined period, suggesting the banking system is less affected by the global financial crisis. More specifically, technical efficiency and scale efficiency in Vietnamese banking is examined when controlling for problem loans. We suggest that controlling for the exogenous impact of problem loans is important for joint-stock banks. Furthermore, our results do not support the hypothesis that acquiring banks are more efficient than the acquired banks. The efficiency improved in majority of merger cases and was not related to acquiring bank’s efficiency advantage over its targets. Small-and medium- banks should be promoted in future acquisitions as a means to enjoying efficiency gains. Finally, there are mixed results on the extent to which the benefits of efficiency gains are passed on to the public.

Keywords: Data Envelopment Analysis, Vietnam-mergers and Acquisitions, Bank Efficiency JEL Classification: G34, G2 DOI: 10.22495/rgcv7i1art8

DOI: 10.22495/rgcv7i1art8