The effect of bank m&As on efficiency: the portuguese experience victor Mendes
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5. ConclusionFrom a cost standpoint, bank privatization seems to have improved cost-efficiency levels of the banks involved. As for the simulated mergers, they seem to help increase efficiency in input utilization. All in all, our results suggest that there is an economic reasoning for future merger and acquisitions in Portuguese banking. Acquisitions will allow stronger organizations to gain control of weaker banks, thus helping to increase input efficiency. Mergers will allow the banking industry to take advantage of the opportunities created by improved technology and deregulation. In the future, banks, big and small, will increasingly use “state-of-the-art” technology, so that they can meet customer needs whenever they want, wherever they need. However, small banks will not disappear. Small businesses rely, and will continue to rely, on small banks to raise capital. Families will continue to do business, the old fashioned way, with small local banks, as well as with larger organizations9. The recent merger wave in world banking may raise fears of lower competition in the banking industry. Bank studies in European banking have supported the traditional structure-performance-paradigm. However, it looks like concentration has not increased substantially at the local level. At the same time, technological improvements are bringing new sources of competition to local banking markets, including nonbank alternatives. This is not to say that bank supervision should be relaxed. The increasing consumer credit problems bring about new concerns regarding supervision matters: the safety and soundness of the payments system must never be jeopardized. ReferencesAltunbas, Y., P. Molyneux and J. Thornton (1997). “Big Bank Mergers in Europe: An Analysis of the Cost Implications”. Economica 64, pp.317-329. Battese (1999). Berger, A. N., R. S. Demsetz and P. E. Strahan (1999). “The Consolidation of the Financial Services Industry: Causes, Consequences, and Implications for the Future”. Journal of Banking & Finance 23, nº 2-4, pp.135-194. Berger, A. N., and T. H. Hannan (1997). “Using Measures of Firm Efficiency to Distinguish Among Alternative Explanations of the Structure-Performance Relationship”. Managerial Finance 23, pp.6-31. Berger, A. N., and L. J. Mester (1997). “Inside the Black Box: What Explains Differences in the Efficiencies of Financial Institutions?”. Journal of Banking and Finance 21, pp.895-947. Boot, A. W. A. (1999). “European Lessons on Consolidation in Banking”. Journal of Banking & Finance 23, nº 2-4, pp.609-613. Coelli, T., (1996). A “Guide to DEAP: Version 2.1: A Data Envelopment Analysis (Computer) Program”. CEPA Working Paper 96/08, University of New England, Armidale. Farrel, M. J. (1957). “The Measurement of Productive Efficiency”, Journal of the Royal Statistical Society - Series A (General) - Part III, Vol.12, p.253-281. Goldberg, L. G. and A. Rai (1996). “The Structure-Performance Relationship for European Banking”, Journal of Banking and Finance, 20, p.745-771. Hannan, T. H. (1997). “Market Share Inequality, the Number of Competitors, and the HHI: An Examination of Bank Pricing”. Review of Industrial Organization 12, pp.23-35. Hannan, T. H. (1991). “Bank Commercial Loan Markets and the Role of Market Structure: Evidence From Surveys of Commercial Lending”. Journal of Banking and Finance 15, pp. 133-149. Haynes, M. and S. Thompson (1999). “The Productivity Effects of Bank Mergers: Evidence From the UK Building Societies”. Journal of Banking and Finance 23, pp.825-846. Jondrow (1992). Kwast, M. L. (1999). “Bank Mergers: What Should Policymakers Do?”. Journal of Banking & Finance 23, pp.629-636. Maudos, Joaquín (1998). “Market Structure and Performance in Spanish Banking Using a Direct Measure of Efficiency”, Applied Financial Economics, 8, p.191-200. Mendes, V. and J. Rebelo (1999). “Productive Efficiency, Technological Change and Productivity in the Portuguese Banking Industry: The Years 1990-95”. Applied Financial Economics 9, 513-521. Molyneux, P. (1999). “Does Size Matter? Financial Restructuring Under EMU”. Manuscript, University of Wales. Molyneux, P. and W. Forbes (1995). “Market Structure and Performance in European Banking”, Applied Economics, 27, p.155-159. Moore, R. R. and T. F. Siems (1998). “Bank Mergers: Creating Value or Destroying Competition?”.Financial Industry Studies, Federal Reserve Bank of Dallas, Third Quarter 1998, pp.1-6. Radecki, L. J. (1998). “Small Expanding Geographic Reach of Retail Banking Markets”. Economic Policy Review, Federal Reserve Bank of New York, nº 4, pp.15-34. Rebelo, J. and V. Mendes (1999). “Malmquist Indices of Productivity Change in Portuguese Banking: The Deregulation Period”. Mimeo, UTAD/FEP. Resti, A. (1998). “Regulation Can Foster Mergers; Can Mergers Foster Efficiency? The Italian Case”. Journal of Economics and Business 50, pp.157-169. Vander Vennet, R. (1996). “The Effect of Mergers and Acquisitions on the Efficiency and Profitability of EC Credit Institutions”. Journal of Banking anf Finance 20, pp.1531-1558. Annex 1: (Re)Privatizations in Portuguese Banking
a Changed its name from “Sociedade Financeira Portuguesa – Banco de Investimento, S.A.” to “Banco Mello S.A.”. On 28 June 1996, changed the name again to “Banco Mello Investimentos, S.A.”. b On 28 June 1996 changed its name to “Banco Mello Comercial, S.A.” Sources: Sousa, Fernando Freire de, Ricardo Cruz. 1995. O Processo de Privatizações em Portugal. Porto: Associação Industrial Portuguesa. Associação da Bolsa de Derivados do Porto. 1996. Processos de (Re)privatização - Sociedades Cotadas (1989/1996). Porto: Associação da Bolsa de Derivados do Porto. Ministério das Finanças. 1999. Privatizações e Regulação: A Experiência Portuguesa. Lisboa: Direcção Geral de Estudos e Previsão, Ministério das Finanças. Download 0.67 Mb. Share with your friends:
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