| This paper investigates the effects of bank consolidation in Korea using panel data from 1995 to 2002. This paper focuses on the effects of M&As on efficiency and on small business lending and the relationship between the profitability and market structure associated with M&As.; With regard to the efficiency analysis, the analyses for two subperiods, 1995--98 and 1999--2002, show that the empirical findings do not exhibit the improvement of cost efficiency of merging banks relative to other banks which were not involved in mergers. In contrast, this study finds evidence of an improvement in profit efficiency of banks with two or more mergers. The ray scale elasticity using translog cost function is not sufficient for explaining the existence of scale economies from M&As.; Second, the empirical evidence suggests that the expansion of bank size, higher market concentration and market share tends to be associated to a decrease in ratio of small business lending. But, the trend of total small business loans over the 1995--2002 time period may raise little concern. Finally, in terms of the market structure, this study finds that high level of market concentration is positively related to profitability, ROA and ROE. |
