A Study Of The Operation Performance Before And After The Merger Of Financial Institution

The financial institution down-hill competition of both Taiwan strait had been severely dwindled while they became the member of The World Trade Organization (WTO)in 2001 and 2002 and faced a fierce competition from Europe, America And Japan. As foreign countries have implemented financial liberalization and internationalization measures, financial institutions have brought revolutionary changes to the environment of the financial services industry. Both Chinese believed in the important basis of continuous developments so that the government should be involved radically and urged the financial institutions on time. It may be noted that Taiwan suffered the strong competition from the international financial institutions in the coming years. In line with the international trend of larger business scale and in order to increase the competitiveness of financial institutions, Taiwan government has promulgated a number of the merger laws. Under such a mechanism, with a financial holding company, cross-selling of financial products is allowed and the mutual use of information, equipments and human resources will be possible. These would expand the scope of business operations, realize the integrated economic scale, integrate and diversify services, and raise the company' s productivity and competitiveness. Like the late of the year 2001, the government approved the applications of applicants of 14 financial institutions to set up financial holding companies.The objectives of the study are the 14 financial holding companies, which have engaged and completed both merger and acquisition completed in the year end of 2004. In measuring the financial statements analysis of such companies between before and after the merger for the year end 2001 and 2004, The study has selected four basic financial factors-solvency factor, liquidity factor, profitability factor and growth of business factor with the division into 2-4 details factors for each basic factor. The objective has been focused on the branches of the financial holding companies including five departments-banks, bills financial corporations, security corporations, goods insurances, life insurances by selecting each financial ratio for each factor dimension. The results showed the performance of merger and acquisition in respect of their financial structure. With these differentfinancial ratios and, compared to other non-financial holding companies are conducted through "T-Test" ,"Wilcoxon Signed-Rank Test " and "Wilcoxon Rank-Sum Test Mann-Whitney U Test " for and empirical study. Considering the differences and the reasons with the effective performance, they are concluded in a common particularity which obviously provided us the whole effect on the performance of such financial holding companies. This study also adopts the questionnaire with five perspectives for 25 questions using Balanced Scorecard by giving different scores for the employees and the customers from such companies. It is easy to compare with the aforementioned financial ratio by revealing the questionnaire in respect of the qualitative target of the financial performance.The major findings of the study are summarized as follows: 1, The major successful factor for the financial holding companies wasdetermined by an appropriate number of group members. 2, The determination as to the effective merger and acquisition has been shownby the different types of financial institutions. 3, The objective of the financial holding companies has greatly affected theefficiency of the performance. 4, To the efficiency of the performance from financial holding companiesascribed the short or long terms about merger. 5, For a successful financial holding company, it is attributed to thecombination of its software and hardware. 6, The presentation of product creativity through the financial holdingcompanies has influenced the capabilities of the whole group.To benefit from the success of financial restructures in merger and acquisition by both of Chinese financial institutions, the study has given more suggestions in respect of governments, industries and the researchers in a little later.