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Do Mergers Improve the X-Efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s, Research Paper 9623

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Do Mergers Improve the X-Efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s, Research Paper 9623

DATE: August 1996

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ABSTRACT: A central issue currently debated among bank analysts and economists is whether mergers enhance the efficiency of surviving banks. This paper investigates the postmerger performance of acquiring banks that participated in a merger during 1980-90. The evidence suggests that acquiring banks failed to improve postmerger X-efficiency. However, we find that acquiring banks experienced moderate gains in profitability and scale efficiency relative to a control sample. The second part of the paper uses regression analysis to identify factors influencing the performance of bank merger survivors. The regression results suggest that improvements in postmerger performance depend on the ability of the bank to strengthen asset quality. We find no evidence to support the hypothesis that in-market mergers lead to significant improvements in efficiency.

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Peristiani, Stavros. "Do Mergers Improve the X-Efficiency and Scale Efficiency of U.S. Banks? Evidence from the 1980s, Research Paper 9623," Research Papers (Federal Reserve Bank of New York) (August 1996). https://fraser.stlouisfed.org/title/6570/item/615538, accessed on March 22, 2023.

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THEMES: CLASSIFICATION:
  • lcc: HG136 .R45 no.9623
IDENTIFIERS:
  • oclc: 35756523
  • fip:fednrp:9623:
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