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

Bhattacharyya, Surajit and Chatri, Ankit (2012): Efficiency of Indian Commercial Banks: The Post-Reform Experience from Mergers & Acquisitions.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Commercial Banking; DEA; Technical Efficiency; Control Group
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

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