Data-driven approach to find the best partner for merger and acquisitions in banking industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qingyuan Zhu ◽  
Xingchen Li ◽  
Feng Li ◽  
Alireza Amirteimoori
Keyword(s):  
Production Technology ◽  
Commercial Banks ◽  
Historical Data ◽  
Banking Industry ◽  
Content Type ◽  
Proposed Model ◽  
Data Driven Approach ◽  
Merger And Acquisitions ◽  
Selection For ◽  
Theoretical Side

PurposeMerger and acquisitions (M&A) is a process of restructuring two or more companies into one, a process that occurs frequently in many companies. Previous studies on M&A mainly paid attention to the potential gains from a merger, while ignored the problem of how to select the partners to merge. This paper aims to select the best partner from different candidates for a given company to merge.Design/methodology/approachEach company's historical data are used to identify each company's own production technology. With resources change, each company's new operation is restricted by its own production technology. Then, a 0–1 integer programming is proposed to select the best partner for M&A.FindingsThe banking industry involving 27 China's commercial banks is given to verify the applicability of our proposed model. The study shows the best partner selection for each bank company.Originality/valueOn the theoretical side, the study uses each company's own historical data to construct its own production technology to compressively reflect the production change after M&A. On the practical side, the study uses the proposed model to help the 27 commercial banks in China to select their best merger partner.

Market structure-performance hypothesis in Kenyan banking industry

2015 ◽  
Vol 10 (4) ◽  
pp. 697-710 ◽  
Author(s):  
Solomon W. Giorgis Sahile ◽  
Daniel Kipkirong Tarus ◽  
Thomas Kimeli Cheruiyot
Keyword(s):  
Market Structure ◽  
Market Efficiency ◽  
Market Share ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Developing Economies ◽  
Market Concentration ◽  
Bank Performance ◽  
Content Type

Purpose – The purpose of this paper is to test market structure-performance hypothesis in banking industry in Kenya. Specifically, the structure-conduct-performance (SCP) and market efficiency hypotheses were examined to determine how market concentration and efficiency affect bank performance in Kenya. Design/methodology/approach – The study used secondary data of 44 commercial banks operating from 2000 to 2009. Three proxies to measure bank performance were used while market concentration and market share were used as proxies for market structure. Market concentration was measured using two concentration measures; the concentration ratio of the four largest banks (CR4) and Herfindahl-Hirschman Index, while market share was used as a proxy for efficiency. The study made use of generalized least square regression method. Findings – The empirical results confirm that market efficiency hypothesis is a predictor of firm performance in the banking sector in Kenya and rejects the traditional SCP hypothesis. Thus, the results support the view that efficient banks maximize profitability. Practical implications – The study provides insights into the role of efficiency in enhancing profitability in commercial banks in Kenya. It has managerial implication that profitable banks ought to be efficient and dispels the notion of collusive behavior as a precursor for profitability. Originality/value – The paper fills an important gap in the extant literature by proving insights into what determines bank profitability in banking sector in Kenya. Although this area is rich in research, little work has been conducted in the developing economies and in particular no study in the knowledge has addressed this critical issue in Kenya.

scholarly journals Does competition only impact on insolvency risk? New evidence from the Chinese banking industry

2017 ◽  
Vol 13 (3) ◽  
pp. 332-354 ◽  
Author(s):  
Yong Tan ◽  
John Anchor
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Empirical Literature ◽  
Content Type ◽  
Insolvency Risk ◽  
Chinese Banking Industry ◽  
The Impact ◽  
Chinese Banking

Purpose The purpose of this paper is to investigate the impact of competition on credit risk, liquidity risk, capital risk and insolvency risk in the Chinese banking industry during the period 2003-2013. Design/methodology/approach This study uses a generalized method of moments system estimator to examine the impact of competition on risk. In particular, translog specifications are used to measure the competition and insolvency risk. Findings The results show that greater competition within each bank ownership type (state-owned commercial banks, joint-stock commercial banks and city commercial banks) leads to higher credit risk, higher liquidity risk, higher capital risk, but lower insolvency risk. Originality/value This paper is the first piece of research testing the impact of competition on different types of risk in banking industry and it further contributes to the empirical literature by using a more accurate competition indicator (efficiency-adjusted Lerner index) and a more precise insolvency risk indicator (stability inefficiency).

scholarly journals The profitability of Chinese banks: impacts of risk, competition and efficiency

2017 ◽  
Vol 16 (1) ◽  
pp. 86-105 ◽  
Author(s):  
Yong Tan ◽  
Christos Floros ◽  
John Anchor
Keyword(s):  
Cost Efficiency ◽  
Commercial Banks ◽  
Banking Industry ◽  
Liquidity Risk ◽  
Security Risk ◽  
Bank Profitability ◽  
Content Type ◽  
Insolvency Risk ◽  
Chinese Banking Industry ◽  
Chinese Banking

Purpose This study aims to test the impacts of risk-taking behaviour, competition and cost efficiency on bank profitability in China. Design/methodology/approach A two-step generalized method of moments system estimator is used to examine the impacts of risk, competition and cost efficiency on profitability of a sample of Chinese commercial banks over the period 2003-2013. Findings The paper finds that credit risk, liquidity risk, capital risk, security risk and insolvency risk significantly influence the profitability of Chinese commercial banks. To be more specific, credit risk is significantly and negatively related to bank profitability; liquidity risk is significantly and positively related to return on assets (ROA) and net interest margin (NIM) but negatively related to return on equity (ROE); capital risk has a significant and negative impact on ROA and NIM but a positive impact on ROE; there is a significant and negative impact of security risk on bank profitability (ROA and NIM). It is found that Chinese commercial banks with higher levels of insolvency risk have higher profitability (ROA and ROE). Finally, higher competition leads to lower profitability in the Chinese banking industry, and Chinese commercial banks with higher levels of cost efficiency have lower ROA. In other words, the structure–conduct–performance paradigm rather than the efficient–structure paradigm holds in the Chinese banking industry. Originality/value This is the first paper to investigate the impact of different types of risk, including credit risk, liquidity risk, capital risk, security risk and insolvency risk, on bank profitability. This is the first study which uses more accurate measurements of efficiency and competition compared to previous Chinese banking profitability literature and which tests their impact on bank profitability. The findings not only provide a general picture on the risk, efficiency and competition conditions in the Chinese banking industry, but also give valuable information to the Chinese Government and to the banking regulatory authorities to make relevant policies.

Research productivity of accounting academics in changing and challenging times

2013 ◽  
Vol 9 (1) ◽  
pp. 4-25 ◽  
Author(s):  
Debbie Wills ◽  
Gail Ridley ◽  
Helena Mitev
Keyword(s):  
Research Productivity ◽  
Research Output ◽  
Meta Analysis ◽  
Global Market ◽  
Individual Characteristics ◽  
International Studies ◽  
Content Type ◽  
Proposed Model ◽  
Data Driven Approach ◽  
The Impact

PurposeThe aim of this study is to investigate factors considered to impact on the research productivity of accounting academics, and identify how the factors were related. The study aims to set itself within an international context of increased workloads, and revenue‐driven research and teaching.Design/methodology/approachA meta‐analysis was conducted of international studies from accounting and related business fields, published between 1988 and 2008, that examined factors influencing the research productivity of academics. A data‐driven approach to thematic analysis was used to synthesise the results, which were categorised into two time periods.FindingsThree clusters of factors that accounted for researcher productivity were found to have had most focus in related studies over the period. These were “Institutional characteristics”, “Intrinsic motivation” and “Knowledge, skills and other individual characteristics”. Hierarchical clusters of factors operating at government, institution and individual levels appeared to influence the research output of accounting academics.Practical implicationsIncreased understanding of the factors that affect the research productivity of accounting academics, and how they are related, has potential to benefit individual researchers and their institutions.Originality/valueModels identified in previous studies have not considered the impact of the relatively recent global market pressures on accounting academics. As the proposed model was developed from a meta‐analysis of many international studies it is likely to accommodate current global pressures better than previous models.

scholarly journals Customer CSR expectations in the banking industry

2014 ◽  
Vol 32 (3) ◽  
pp. 223-244 ◽  
Author(s):  
Andrea Pérez ◽  
Ignacio Rodríguez del Bosque
Keyword(s):  
Corporate Governance ◽  
Commercial Banks ◽  
Banking Industry ◽  
Governance Structure ◽  
Corporate Governance Structure ◽  
Content Type ◽  
High Expectations ◽  
Savings Banks ◽  
Corporate Social ◽  
Corporate Crisis

Purpose – The purpose of this paper is to examine customer corporate social responsibility (CSR) expectations in the crisis context of the Spanish banking industry. The paper also takes into consideration the role that corporate governance structure plays in customer CSR expectations. Design/methodology/approach – Analysing 648 customers of savings banks and 476 customers of commercial banks, several univariate statistics and two cluster analyses are implemented. Findings – The authors identify significantly consistent patterns in the CSR expectations of savings banks and commercial banks customers. The customers of both types of banking companies have similar high expectations concerning the CSR oriented to customers, shareholders and supervising boards, employees, the community and legal and ethical CSR. Also customers of both types of banking companies can be consistently classified as customer oriented, legally (customer)-oriented and CSR-oriented customers depending on their CSR expectations. Practical implications – These results have interesting implications for managers because it allows them to develop optimal CSR based on their customers’ expectations. In this regard, it is observed that the CSR expectations of savings banks and commercial banks customers are quite homogeneous in such a way that the traditional differentiation in the CSR implemented by savings banks and commercial banks may be no longer justified. Originality/value – Previous scholars who have analysed customer CSR expectations have not studied them in a crisis context. This paper contributes to literature by proposing new managerial strategies for companies facing a product or corporate crisis. Scholars studying customer CSR expectations in the banking industry have not considered the role of corporate governance structure either. This paper provides detailed information about the CSR expectations of savings banks customers and commercial banks customers.

How monetary policies and ownership structure affect bank supply chain efficiency: a DEA-based case study

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yelin Hu ◽  
Bingjing Li ◽  
Ying Zha ◽  
Douqing Zhang
Keyword(s):  
Supply Chain ◽  
Ownership Structure ◽  
Commercial Banks ◽  
Banking Industry ◽  
Operating Efficiency ◽  
Bank Performance ◽  
Monetary Policies ◽  
Content Type ◽  
Dea Model ◽  
Supply Chain Efficiency

PurposeThe banking industry plays a key role in China's financial industry. In the past decade, the speed of the development of China's commercial banks has gradually declined. Commercial banks with different ownership structures also have certain differences in terms of operating efficiency, and their monetary policies are often different. Therefore, the authors study the impact of ownership structure on the efficiency of commercial banks under different monetary policies. This study also provides relevant reference opinions with regard to the healthy, sustainable and stable development of China's banking industry.Design/methodology/approachThis paper mainly uses the two-stage data envelope analysis (DEA) model under meta-frontier and group frontier to study the deposit and loan efficiency changes of 16 banks from 2007 to 2014 under ownership structure heterogeneity. Furthermore, the model introduces the balance parameters between deposits and loans, in order to realize the mathematical abstraction description of macro-monetary policy.FindingsFirst, based on bank efficiency analysis, the paper finds that most banks' loan efficiency is higher than their deposits. Second, the paper concludes that different monetary policies have little effect on bank deposit and loan efficiency, while ownership heterogeneity has a significant impact on bank performance. Finally, through the decomposition of the sources of inefficiency in bank performance, this paper finds that management and technology are two factors that affect the inefficiency of banks.Originality/valueThe authors work contributes to the existing literature in the following ways: First, to the best of the authors’ knowledge, this is the first attempt to use the DEA model to study the relationship between monetary policies and bank supply chain efficiency. The results may provide additional managerial implications for the banking industry from the perspective of monetary policies. The result is helpful in terms of explaining how and why banks should strengthen risk management, as well as how to deal with non-performing loans in management terms and finally, why banks should make financial technology innovations in technology terms.

scholarly journals Market structure and performance of Malaysian banking industry

2016 ◽  
Vol 14 (2) ◽  
pp. 158-177 ◽  
Author(s):  
Rossazana Ab-Rahim ◽  
Sheen Nie Chiang
Keyword(s):  
Financial Performance ◽  
Market Structure ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Least Squares Method ◽  
Efficient Frontier ◽  
Market Concentration ◽  
Content Type ◽  
Net Interest Margin

Purpose The main purpose of this paper is to examine the relationship between the market structure and financial performance of Malaysian commercial banks over the period of 2000 to 2011 by testing the structure-conduct-performance (SCP) and efficient-structure (ESH) hypotheses. Design/methodology/approach Data envelopment analysis (DEA) is employed to measure the efficiency of banks, while concentration ratio is used to assess the market structure of Malaysian banks. Next, utilizing the least squares method, both variables – market structure and efficiency of banks – among other explanatory variables (market share, operating expenses, loans ratio and size of banks) are regressed upon the dependent variable, namely financial performance of banks represented by return on asset (ROA), return on equity (ROE) and net interest margin (NIMTA). Findings The concentration of Malaysian banking industry is at a declining trend; structurally speaking, Malaysian banks are more competitive due to less market concentration. In terms of efficiency, the DEA results reveal that Malaysian banks are operating below their capacity at 40 per cent of efficiency. Thus, Malaysian banks could reduce their utilization of inputs by 60 per cent to operate on the efficient frontier. Next, the results offer support to ESH, which implies that market concentration and banking efficiency determines the profitability performance of Malaysian commercial banks. Originality/value Past studies on Malaysian banking sector had tended to focus either on measuring the performance or assessing the market structure of banks. Thus, this study attempts to fill the gap in the literature by testing the nexus between the market structure and the performance of banks.

Improving highway accident management through patrol beat scheduling

2014 ◽  
Vol 37 (1) ◽  
pp. 108-125 ◽  
Author(s):  
Jiann-Sheng Wu ◽  
Tze-chiang Lou
Keyword(s):  
Historical Data ◽  
Response Times ◽  
Work Hours ◽  
Simulation Program ◽  
Personnel Cost ◽  
Content Type ◽  
Daily Work ◽  
Scheduling Model ◽  
Proposed Model ◽  
Accident Management

Purpose – The purpose of this paper is to improve the efficiency of accident management from the angle of reducing highway accident response times while taking into account total daily work hours. Design/methodology/approach – The authors developed a patrol beat scheduling model, which is formulated as a chance-constrained optimization model, with the objective of minimizing the sum of officer work hours. Along with the model, a simulation program was also developed to help evaluate the effectiveness of the model-generated beat schedule in terms of response times. Findings – This study concluded that, first, the current manually designed beat schedule could be improved should the National Highway Police Bureau adopt the proposed model. Second, the total daily work hours of the model-generated schedule at the confidence level of 100 percent were 64 hours, 21 hours less than the average work hours recorded in the 2006 data, or about an improvement of 24 percent. Should the model be adopted, not only response times will be improved, the 24 percent reduction in work hours could be translated into a cut in personnel cost. Research limitations/implications – The scheduling model and simulation program are both built upon one-year historical data whose accuracy and completeness is prerequisite. Practical implications – The proposed model can be adopted by other public service agencies such as fire departments, or emergency service centers. By replacing the historical data used in the study with their own data, agencies can evaluate the efficiency of their existing schedule or generate various schedules based on institutional needs. Originality/value – This model utilizes historical accident data to generate optimal beat schedule and evaluate the efficiency of such schedule. Similar models have not been found in other studies.

Non-performing assets and technical efficiency of Indian banks: a meta-frontier analysis

2018 ◽  
Vol 25 (7) ◽  
pp. 2105-2125 ◽  
Author(s):  
Nitin Arora ◽  
Nidhi Grover Arora ◽  
Kritika Kanwar
Keyword(s):  
Technical Efficiency ◽  
Commercial Banks ◽  
Banking Industry ◽  
Efficiency Score ◽  
Commercial Banking ◽  
Foreign Banks ◽  
Undesirable Output ◽  
Content Type ◽  
Frontier Analysis ◽  
Indian Banks

Purpose The issue of mounting non-performing assets (NPAs) in Indian banking industry is serious and attracting attention of academia and policy planners. Thus, the purpose of this paper is to test the hypothesis whether NPAs in Indian commercial banking have reached at alarming state where they start affecting the technical efficiency levels adversely or not. Design/methodology/approach The efficiency score have been computed using case model (model with NPAs as bad/undesirable output) vs control model (model without NPAs as bad/undesirable output) methodology under meta-frontier data envelopment analysis framework. Findings It has been noticed that the effect of NPAs on overall technical efficiency and its various components is insignificant. The comparison of the case models (i.e. model with NPAs as bad output) with the control models (i.e. model without NPAs) reveals insignificant difference in average efficiency scores and rank distribution of commercial banks. The major source of inefficiency is technology gap (i.e. structure, setup and objectives of banking) among public, domestic private and foreign private categories of banks. Practical implications Though NPAs are increasing in Indian banking industry and specifically in Indian public sector banks because of their compulsory lending to priority sector yet the banks have huge scope to extend credit to priority sector as the NPAs have not reached at alarming stage where they start affecting adversely the efficiency performance. Originality/value Given the fact that the banking penetrations, structure and objectives differ significantly across ownership, separate frontiers for each ownership (public, private and foreign banks) category has been used to evaluate the technical efficiency levels of 81 commercial banks operating in India over the period 2005 to 2013.

A partner selection model for collaborative product innovation from the viewpoint of knowledge collaboration

Kybernetes ◽  
2019 ◽  
Vol 49 (6) ◽  
pp. 1623-1644 ◽  
Author(s):  
Jie Jian ◽  
Milin Wang ◽  
Lvcheng Li ◽  
Jiafu Su ◽  
Tianxiang Huang
Keyword(s):  
Optimization Model ◽  
Product Innovation ◽  
Partner Selection ◽  
Multi Objective Optimization ◽  
Content Type ◽  
Multi Objective ◽  
Proposed Model ◽  
Np Hard Problem ◽  
Selection For ◽  
Knowledge Collaboration

Purpose Selecting suitable and competent partners is an important prerequisite to improve the performance of collaborative product innovation (CPI). The purpose of this paper is to propose an integrated multi-criteria approach and a decision optimization model of partner selection for CPI from the perspective of knowledge collaboration. Design/methodology/approach First, the criteria for partner selection are presented, considering comprehensively the knowledge matching degree of the candidates, the knowledge collaborative performance among the candidates, and the overall expected revenue of the CPI alliance. Then, a quantitative method based on the vector space model and the synergetic matrix method is proposed to obtain a comprehensive performance of candidates. Furthermore, a multi-objective optimization model is developed to select desirable partners. Considering the model is a NP-hard problem, a non-dominated sorting genetic algorithm II is developed to solve the multi-objective optimization model of partner selection. Findings A real case is analyzed to verify the feasibility and validity of the proposed model. The findings show that the proposed model can efficiently select excellent partners with the desired comprehensive attributes for the formation of a CPI alliance. Originality/value Theoretically, a novel method and approach to partner selection for CPI alliances from a knowledge collaboration perspective is proposed in this study. In practice, this paper also provides companies with a decision support and reference for partner selection in CPI alliances establishment.

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