Mergers and acquisitions in the Malaysian banking industry: technical and scale efficiency effects

Employing an event study with a three-year window analysis together with the non-parametric frontier approach, Data Envelopment Analysis (DEA), this paper investigates the effects of mergers and acquisitions on Malaysian banks' technical and scale efficiency. The results suggest that the merger has resulted in a higher mean technical efficiency of the Malaysian banking sector post-merger. In five out of the seven merger cases, the empirical findings suggest that the acquirers were relatively more technically efficient. The empirical findings also suggest that the acquiring banks' mean technical efficiency improved (deteriorates) from the merger with a more (less) efficient bank in five out of the seven merger cases analysed.