Rights statement: This is the author’s version of a work that was accepted for publication in Economic Modelling. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economic Modelling, 73, 2018 DOI: 10.1016/j.econmod.2018.04.002
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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
}
TY - JOUR
T1 - Assessing the strategic fit of potential M&As in Chinese banking
T2 - A novel Bayesian stochastic frontier approach
AU - Chen, Zhongfei
AU - Wanke, Peter
AU - Tsionas, Mike G.
N1 - This is the author’s version of a work that was accepted for publication in Economic Modelling. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Economic Modelling, 73, 2018 DOI: 10.1016/j.econmod.2018.04.002
PY - 2018/6
Y1 - 2018/6
N2 - Banking in China is well-known for being extremely fragmented, thus making the analysis of the sector not a straightforward task. This study aims to explore the strategic fit of potential mergers and acquisitions in the Chinese banking industry. When the operations of two banks are jointly analyzed this means that the inputs and the outputs of these two individual banks are somehow combined in an attempt to better understand the sector as a whole. A novel SFA model with Bayesian inference on input/output prices is proposed to assess the impact of business-related variables on efficiency levels. The results not only reveal that bank size, type, and origin present a significant impact on individual technical efficiency levels, but also exert a significant impact on the efficiency frontier of the industry. The strategic fit of M&As in the Chinese banking industry strongly relies on opportunities derived from banking automation that may arise from acquiring technologically obsolete small banks. Big and foreign banks also exert a positive impact on the technological catch-up of Chinese banks, which may suggest opportunities for sector deregulation.
AB - Banking in China is well-known for being extremely fragmented, thus making the analysis of the sector not a straightforward task. This study aims to explore the strategic fit of potential mergers and acquisitions in the Chinese banking industry. When the operations of two banks are jointly analyzed this means that the inputs and the outputs of these two individual banks are somehow combined in an attempt to better understand the sector as a whole. A novel SFA model with Bayesian inference on input/output prices is proposed to assess the impact of business-related variables on efficiency levels. The results not only reveal that bank size, type, and origin present a significant impact on individual technical efficiency levels, but also exert a significant impact on the efficiency frontier of the industry. The strategic fit of M&As in the Chinese banking industry strongly relies on opportunities derived from banking automation that may arise from acquiring technologically obsolete small banks. Big and foreign banks also exert a positive impact on the technological catch-up of Chinese banks, which may suggest opportunities for sector deregulation.
KW - Banks
KW - China
KW - Potential merger and acquisitions
KW - SFA
KW - Bayesian inference
KW - Strategic fit
U2 - 10.1016/j.econmod.2018.04.002
DO - 10.1016/j.econmod.2018.04.002
M3 - Journal article
VL - 73
SP - 254
EP - 263
JO - Economic Modelling
JF - Economic Modelling
SN - 0264-9993
ER -