Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70065
Authors: 
Lang, Günter
Welzel, Peter
Year of Publication: 
1997
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe, Institut für Volkswirtschaftslehre der Universität Augsburg 167
Abstract: 
Based on an unbalanced panel of all Bavarian cooperative banks for the years of 1989-95 which includes information on 243 mergers, we analyze motives for and cost effects of small-scale mergers in German banking. Estimating a frontier cost function with a time-variable stochastic efficiency term we show that positive scale and scope effects from a merger arise only if the merged unit closes part of the former branch network. When we compare actual mergers to a simulation of hypothetical mergers, size effects of observed mergers turn out to be slightly more favorable than for all possible mergers. Banks taken over by others are less efficient than the average bank in the same size class, but exhibit on average the same efficiency as the acquiring firms. For the post-merger phase, our empirical results provide no evidence for efficiency gains from merging, but point instead to a leveling off of differences among the merging units.
Subjects: 
banking
mergers
efficiency
JEL: 
G21
L29
Document Type: 
Working Paper

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