A Empirical Analysis On Efficiency Of Bank Merger And Restructuring In China

During last century, the finance sector became the key role in the wave of world's merger and restructuring. A number of mega-mergers have occurred in the United State, Europe and even Asian countries. Under this background, whether bank merger can bring efficiency becomes an important topic in academic community. For the sake of survival in the severe competition, China also joins into this practice in recent years. But for some characteristics of our own, bank mergers in China have some differences from Western countries, so the analysis is more complex and the study in this filed become necessary.On the basis of cross-curricular theory in economy, management and finance, and using the latest efficient frontier approach, this paper analysis the merger and restructuring efficiency in Chinese banking industry through three different efficiency, which is cost efficiency, profit efficiency and X efficiency. In order to make the research more suitable for Chinese banks, we put all the merger affaires happened in China into two types: government-oriented merger and market-oriented merger .The Econometrics Analysis and case study are two major approaches.The paper first explains the motivation and effect of merger and restructuring, and finds that both of them are for efficiency improving. After reviewing and comparing the former study concerned this side, we give our thought for bank merger and restructuring: one major part use the stochastic frontier approach by establishing the translog cost model to analysis the cost efficiency with the panel data from seven Chinese banks; the other major part use the data envelopment analysis to study the X efficiency, and finance data to study profit efficiency.The two method almost give the same result, it show that, for the type of government-oriented mergers, the state-owned banks do have efficiency increase after merger, but the share holding commercial banks are not; and for market-oriented mergers, the efficiency improvement is not obvious too in a short time.