Research On The Overseas M&A Efficiency Of Chinese Banks

Since the1990s, bank's M&A has developed at fast speed worldwidely, and there has been a lot M&A cases. Because of the financial globalization, bank's overseas M&A has become one of the crucial factors affecting the pattern of international banking industry. After years of rapid development, Chinese banks'financial strength has been more and more powerful. In order to integrate into the trend of bank's overseas M&A and implement the international business expansion strategy, more and more Chinese banks have taken part in the activities of overseas M&A.This paper aims at how deeply is the efficiency of Chinese banks affected by the overseas M&A? How many experience and lessons worth absorbing for Chinese banks? In order to improve the M&A efficiency, which principles should Chinese banks insist on when taking part in the activities of overseas M&A.The previous literature is mostly about the situation of domestic M&A. The extent and depth of researches on foreign banks consolidating domestic banks are also prominent, while few works address the issue of M&A in reverse direction. In fact, there are cases of overseas M&A for Chinese banks. At the present stage, analysis of how deeply does overseas M&A influence on bank efficiency is of significance in both theory and practice.First, this paper reviews various studies on bank consolidation and bank efficiency. It summarizes the three main methods of analyzing the bank M&A efficiency, their merits and disadvantages. Based on literature review, this paper summarizes some concepts concerning bank M&A, and also summarizes motives and significance of overseas M&A and the history of M&A in International banking (including overseas M&A for Chinese banks).Then, this paper introduces the concepts of bank efficiency and forms of three kinds of DEA models(Malmquist index-DEA-model,BCC-DEA-model and Super Efficiency-DEA-model). It summarizes12overseas M&A cases conducted by Chinese banks between2006to2010, and also selects9Chinese banks that was not taking part in the activities of overseas M&A as control group. This paper makes the Malmquist Index decomposition of the sample banks during the review period, then makes analysis that how deeply does overseas M&A affect the efficiency of Chinese banks in dynamic view. Then this paper is using the BCC-DEA-model and Super Efficiency-DEA-model to calculate the types of efficiency for15sample banks, establishes the influential factors model for bank efficiency based on Tobit-model, with M&A as a dummy variable. The test shows:overseas M&A has a significant negative effect on the operating performance of Chinese banks. This may be caused by many factors: pre-assessment working is not well done; timing of M&A is not good; lacking of ability in integration of resources, and so on.This paper summarizes the experiences and lessons of the Chinese banks overseas M&A from the relevant cases. And provides five kinds of suggestions that can improve the efficiency of overseas M&A from the view of Chinese banks on the basis of the above empirical studies.