Market Pricing of Bank M&As and Efficiency in Europe

2021 ◽  
pp. 91-110
Author(s):  
Sailesh Tanna ◽  
Hodian Urio ◽  
Ibrahim Yousef
Keyword(s):  
Stochastic Frontier Analysis ◽  
Shareholder Value ◽  
Stochastic Frontier ◽  
Abnormal Returns ◽  
Positive Influence ◽  
Bank Efficiency ◽  
Market Pricing ◽  
Frontier Analysis ◽  
Using Data ◽  
Merger Announcements

This study investigates the impact of bank mergers and acquisitions (M&As) on bank efficiency and how such efficiencies are expected to influence bank shareholder value upon merger announcements. It employs stochastic frontier analysis and event study methods along with regression analysis to account for the influences of pre-merger and post-merger efficiencies of bidders and targets in assessing their impact on bidder abnormal returns. Using data for a sample of large commercial bank M&As from 22 European countries, the authors find that bank bidders achieve short-term shareholder value gains from merger announcements, and this could be associated with the perceived efficiencies of bidders and targets. More generally, the evidence supports the view that bank profit efficiency has a positive influence on bidder returns from merger announcements, and therefore markets do take into account the importance of efficiency in value creation. This suggests that stock markets price operational efficiency of banks in predicting value gains from European Bank M&As.

scholarly journals Resources, innovation and performance in labor courts in Brazil

2018 ◽  
Vol 52 (3) ◽  
pp. 486-506
Author(s):  
Marcos de Moraes Sousa ◽  
Tomas Aquino Guimaraes
Keyword(s):  
Stochastic Frontier Analysis ◽  
Negative Impact ◽  
Stochastic Frontier ◽  
Critical Periods ◽  
Key Factors ◽  
Judicial Process ◽  
Frontier Analysis ◽  
Adoption Of Innovations ◽  
And Performance ◽  
Using Data

Abstract This article examines the relationships between resources, innovation, and performance in courts. Data from 24 Brazilian labor courts covering the period between 2003 and 2013 were used to develop theoretical/empirical models using Data Envelopment Analysis and stochastic frontier analysis. The results indicate that there was improvement in the performance of the courts during the period examined. This improvement owed more to the adoption of innovations than to variation in technical efficiency. Critical periods for the adoption of the electronic judicial process (in 2006 and 2012) had a negative impact on the index related to innovation adoption. The stochastic model shows that court size and investment in the training of personnel are key factors for explaining the variation in the efficiency of the courts.

Measuring efficiency of Vietnamese banks

2017 ◽  
Vol 29 (2) ◽  
pp. 171-182 ◽  
Author(s):  
Thanh Ngo ◽  
David Tripe
Keyword(s):  
Cost Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Control Variable ◽  
Banking System ◽  
Alternative Methods ◽  
Content Type ◽  
Frontier Analysis ◽  
Using Data ◽  
The Cost

Purpose This paper aims to examine alternative methods for treating nonperforming loans (NPLs) in bank cost-efficiency studies using stochastic frontier analysis (SFA). Design/methodology/approach The authors consider three methods of treating NPLs in SFA: as an additional control variable, as an environmental factor or as a deduction from total loans. Using data from the Vietnamese banking system (2003-2010), the authors then compare these results with those of the base model (where total loans is used regardless of the NPLs) to see which one is more appropriate for this study. Findings The authors observed that the first two methods are inappropriate for the analysis: one cannot find the significant relationship between NPLs and the banks’ total cost, and the other cannot account for any inefficiency at all. The authors suggested that the third method of separating NPLs from total loans can provide better insights. Using the proposed method, the authors showed that the cost-efficiency of Vietnamese banks over the period examined was moderate with a slight decreasing trend. When NPLs are separated, the cost-efficiency decreases in state-owned banks and big banks, whereas it increases in small and private banks. Research limitations/implications Research is limited to Vietnamese banks during a certain period, and it would be useful to apply the same technique to other data sets. Practical implications The paper suggests a new approach to account for NPLs in cost SFA studies in banking. Originality/value The paper provides a much more searching analysis of NPLs in banking than has generally been seen in previous research.

scholarly journals THE EFFECTS OF COMPETITION ON EFFICIENCY: THE VIETNAMESE BANKING INDUSTRY EXPERIENCE

2017 ◽  
pp. 1-30 ◽  
Author(s):  
THANH PHAM THIEN NGUYEN ◽  
SON HONG NGHIEM
Keyword(s):  
Cost Efficiency ◽  
Banking Sector ◽  
Stochastic Frontier Analysis ◽  
Global Financial Crisis ◽  
Stochastic Frontier ◽  
Bank Efficiency ◽  
Frontier Analysis ◽  
The Cost ◽  
Efficiency Effects ◽  
Industry Experience

Given considerable changes in the Vietnamese banking environment brought about by significant reforms towards liberalization during the last two decades, this study investigates the evolution of competition and efficiency, compares the competition and efficiency of state-owned banks to joint-stock banks, and then tests the “quiet life” hypothesis in this industry over the period 2000–2014. This study employs the efficiency-adjusted Lerner index (i.e., market power) to capture competition, and the cost efficiency estimated by a Fourier-flexible function stochastic frontier analysis (SFA) to capture bank efficiency. This study firstly finds a slight improvement of competition and cost efficiency in the Vietnamese banking sector over the analysis period. Secondly, there are no significant differences in competition and cost efficiency level between state-owned and joint-stock banks. Thirdly, a positive causality running from competition to cost efficiency is documented, providing evidence of supporting the “quiet life” hypothesis. Finally, positive efficiency effects of the banks’ capital ratio and size are found, while insignificant impacts of the growth of GDP per capita and 2007 global financial crisis were observed. The results are strongly robust to a variety of tests. The findings suggest pro-competition, pro-capitalization and pro-size expansion policies in the Vietnamese banking sector if targeting at improving the cost efficiency of Vietnamese banks.

STOCHASTIC FRONTIER ANALYSIS OF SINGAPORE MANUFACTURING INDUSTRIES

2004 ◽  
Vol 49 (01) ◽  
pp. 85-103 ◽  
Author(s):  
SOO-WEI KOH ◽  
SHAHIDUR RAHMAN ◽  
G. K. RANDOLPH TAN
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Learning By Doing ◽  
Alternative Measure ◽  
Efficiency Change ◽  
Frontier Analysis ◽  
Manufacturing Productivity ◽  
Using Data ◽  
Allocative Inefficiency

Previous papers on Singapore manufacturing productivity have focused almost exclusively on total factor productivity (TFP) growth rates and ignored the problem of measuring the extent of learning-by-doing. In this paper, we examine an alternative measure: the rate of technical efficiency change. Using data from 1974–1998, a translog production frontier is estimated. Following a conceptual framework popularised by Bauer (1990), productivity growth is decomposed into components arising from technical progress, technical efficiency change, a scale economies effect and an allocative inefficiency effect.

Modeling the efficiency of Tunisian and Moroccan banks using the SFA approach

2019 ◽  
Vol 68 (5) ◽  
pp. 879-902
Author(s):  
Hela Kallel ◽  
Salah Ben Hamad ◽  
Mohamed Triki
Keyword(s):  
Economies Of Scale ◽  
Stochastic Frontier Analysis ◽  
Cost Model ◽  
Stochastic Frontier ◽  
Likelihood Estimation ◽  
Foreign Banks ◽  
Bank Efficiency ◽  
Data Set ◽  
Content Type ◽  
Frontier Analysis

Purpose The purpose of this paper is to evaluate and compare bank efficiency between the two Maghreb countries, Tunisia and Morocco, over the period 2005–2014. Design/methodology/approach The authors follow the stochastic frontier analysis, where the preferred cost model is determined via various hypothesis tests based on the maximum likelihood estimation. Then, the first and the second derivates of the cost function are employed to determine scale elasticities, scale inefficiencies and technological progress. Findings Specification tests indicate that the Fourier Flexible form provides better fit to the data set. Further, the estimated model shows that Tunisian and Moroccan banks’ efficiency is positively affected by banking service quality, but negatively influenced by both bank capitalization and GDP growth. Overall, Moroccan banks are found to be the most efficient despite the decrease of efficiency levels in both countries. Additionally, foreign banks have a higher scale inefficiency and, therefore, a lower cost efficiency. Equally, the technical progress raises banking costs in both countries, providing a decrease in efficiency scores. Practical implications The findings of this study provide novel insights to Tunisian and Moroccan policy makers on the relevance of the smaller banks’ consolidation to improve bank efficiency by achieving unrealized economies of scale. Also, more reforms should be implemented in Tunisia to reduce non-performing loans. Originality/value To the best of the authors’ knowledge, this study is the first which offers a comparison between Tunisian and Moroccan banks to clarify the sources of inefficiency and to make strategic decisions.

scholarly journals Efficiency Estimates and Rankings Employing Data Envelopment and Stochastic Frontier Analyses: Evaluating the Management of U.S. Public Colleges

2012 ◽  
Vol 4 (8) ◽  
pp. 444-452 ◽  
Author(s):  
G. Thomas Sav
Keyword(s):  
Public Management ◽  
Stochastic Frontier Analysis ◽  
Public Funding ◽  
Stochastic Frontier ◽  
Returns To Scale ◽  
The United States ◽  
Data Envelopment ◽  
Frontier Analysis ◽  
Truncated Normal ◽  
Using Data

This paper estimates and compares operating efficiencies of publicly owned associate degree granting colleges in the United States using data envelopment analysis (DEA) and stochastic frontier analysis (SFA). Comparisons are based on panel data for 698 colleges over four academic years, 2005-09. Included are both constant and variable returns to scale DEA estimates along with half and truncated normal inefficiency SFA estimates. The values 0.56 vs. 0.45 represent the largest mean DEA-SFA efficiency differential. DEA results indicate that 13% of colleges are fully (100%) efficient while SFA puts that percentage at only 1.7%. Comparisons of rankings based on efficiency performance generated a weak 0.65 correlation. Encouragingly, despite the financial turmoil initiated by the global crisis, the findings indicate that colleges have managed large efficiency gains over the four-year period. By 2008-09, DEA estimated efficiency increased to approximately 60%. Given continuing reductions in higher education public funding and increasing interest in public management reforms, the results should be of both managerial and public policy interest.

scholarly journals Productive efficiency analysis of quantitative economics journals through Stochastic Frontier Analysis using panel data

2020 ◽  
Vol 30 ◽  
pp. 297-311
Author(s):  
José Manuel Gavilan Ruiz ◽  
Francisco Javier Ortega Irizo
Keyword(s):  
Production Process ◽  
Stochastic Frontier Analysis ◽  
Scientific Journal ◽  
Stochastic Frontier ◽  
Productive Efficiency ◽  
Mathematical Methods ◽  
Frontier Analysis ◽  
Economics Journals ◽  
Using Data ◽  
Number Of Citations

The main goal of a scientific journal is to diffuse new knowledge. The number of citations received by a journal can be considered as a measure of this objective and, in turn, as a measure of productivity in relation to the production process in which the journals are involved. In order to assess this production process, in this paper econometric models using data panel are employed to obtain measures of efficiency for those journals belonging simultaneously to the areas of “economics” and “social science, mathematical methods” in the Web of Science database. This efficiency is measured in terms of the distance between the actual production of the journals and their estimated maximum achievable number of citations based on their available resources.

scholarly journals Comparison of Technical Efficiency of Hospitals Affiliated to Shahid Sadoughi University of Medical Sciences before and after Executing Health Reform Plan

2020 ◽  
Author(s):  
Mohammad Zarezadeh ◽  
Payman Mahboobi Ardakan
Keyword(s):  
Technical Efficiency ◽  
Health Reform ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
P Value ◽  
Medical Sciences ◽  
Frontier Analysis ◽  
Reform Plan ◽  
Before And After ◽  
Using Data

Background: Hospitals are one of the greatest and most costly operational units of the health system and a study on its performance may be a criterion for operation and efficiency assessment of its resource consumption. The present study was done in 2017 with the purpose of assessing technical efficiency of the selected hospital under the coverage of Yazd University of Medical Sciences using Data Envelopment Analysis (DEA) in context of Health Reform Plan. Methods: This research is a descriptive-analytical study was done in 2017. In this research in order to determine assessing the efficiency of Yazd University of Medical Sciences hospitals, 10 hospitals affiliated with this university were chosen. To collect data the information collection form including specifications of hospital as well as input and output index is used and the data before and after executing Health Reform Plan were collected and compared. The input-oriented DEA method is used for estimating technical efficiency of hospitals and data analysis is done by DEAP software and two-sample paired-t test SPSS21. Results: The average of hospitals that have been studied before and after the reform plan is 0.985 and 0.990 respectively. In management efficiency, it is respectively 0.986 and 0.992 before and after the reform plan and the efficiency average of the hospital's scale before and after executing the health reform plan is respectively 0.999 and 0.997. There is no meaningful relationship observed between hospitals' efficiency grades before and after the reform plan in these three technical, management and scale types of efficiency (P-value > 0.05). Conclusion: According to results we could say the efficiency of the hospitals was not so affected by reform plan. It is recommended to assess the efficiency of the Stochastic Frontier Analysis (SFA) method on a linear basis in addition to identifying indexes that are effective in efficiency of hospitals.

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