An Empirical Research On Merger And Restructuring Efficiency Of China's Commercial Banks

With the acceleration of economy globalization and integration, the international financial market expands rapidly. More and more international financial groups are undertaking continuous mergers and restructuring so as to increase their market shares and enhance their overall strength. By merger and restructuring, these banks not only expand their scale of operation but also enhance their capacity to guard against financial risks. Since the gradual financial market openness at the end of 2006, China's commercial banks have been confronted with furious competitions from not only domestic commercial banks but also foreign ones of enormous potentiality. Chinese commercial banks have sped up their pace of merger and restructuring so as to diversify risks and enhance competing capacity. In order to study whether the merger and restructuring can bring about efficiency, this thesis selects four banks as the sample and evaluates their efficiency by financial ratio analysis and data envelopment analysis (DEA) respectively.This article first defines the merger and restructuring of commercial banks and analyzes their restructuring motivations. The status quo in merger and restructuring of China's commercial banks is also demonstrated in this part. Secondly, different research methods on merge and restructuring are reviewed and the criteria to select evaluating methods are proposed according to different purposes in merger and restructuring. Then, applying financial ratio analysis and DEA, the empirical research is conducted on the sample banks. The thesis concludes that their profit efficiency will decrease after the immediate fulfillment of merger and restructuring and will be restored after a period of adjustment and that their technical efficiency will be improved or kept still by cross-section analysis. Finally, reasonable and comprehensive measures are proposed to promote the merger and restructuring efficiency of our commercial banks both internally and externally.During the course of DEA analysis, the technical efficiency of sample banks is not only evaluated by longitudinal analysis but also analyzed by cross-section analysis. Applying qualitative and quantitative analytical methods, this thesis provides references for future researches and is of guiding significance for the implementation of merger and restructuring in China's commercial banks.