An Empirical Analysis On The Scale Efficiency Of Mergers&Acquisitions Of Chinese Commercial Banks

With the accelerating process of economic globalization and financial liberalization,financial institutions have to develop transnational operation to participate in global competition,which make financial capital reconfigured on a larger scope. In order to gain a foothold in thecompetition, the Banks started to expand its scope of business through mergers, acquisitions andother ways, aiming at reducing operating costs, enhancing core competitiveness, and winninggreater profit. In China, more and more Banks involve in the wave of mergers and acquisitions.So whether the M&A could improve the efficiency is a considerable question. It is a greatmeaning for Chinese banks to master the rule of banking mergers and acquisitions accurately andpromote the development of banking mergers and acquisitions in our country.The main line of this article is: Whether M&A can improve the efficiency of Chinesecommercial Banks, and how to improve the efficiency.This paper first introduces the development of mergers and acquisitions in our country.Then it demonstrates the connotation of M&A effect of the commercial bank, including thediversification effect, synergies and economies of scale. On the basis of these, we discuss somemethods to evaluate the efficiency of bank M&A. Then we decide to apply the method ofstochastic frontier SFA to analyze integration scale efficiency of commercial bank M&A in ourcountry. In empirical research, we select eight representative commercial Banks as samples toevaluate the economies of scale efficiency of mergers and acquisitions activity from1996to2012.In conclusion, the efficiency of the eight commercial Banks improves year by year from1996to2012, especially after M&A. But the efficiency of joint-stock Banks is higher thanstate-owned Banks generally. Because the joint-stock Banks have more flexible mechanism anda spirit of innovation. But as more and more market-oriented mergers and acquisitions occur instate-owned Banks, the gap between the two decreases slowly. In addition, there will be a timelag in M&A efficiency to the larger bank mergers and acquisitions, but efficiency will increase inthe next few years. Finally, we put forward some relevant policy suggestions: improving theenvironment of policy, strengthening resources integration after M&A, and promoting mixedmanagement in a way.