A two‐stage inverse data envelopment analysis approach for estimating potential merger gains in the US banking sector

Abstract

Mergers and acquisitions are mainly due to financial and technological innovations but could also be due to changes in the structure of the economy, which alters the optimal production functions of banks. Banks that seek to be operationally efficient would focus more on expanding their asset size, in the face of bad loans, leading to the acquisition of less efficient banks. This paper develops two‐stage inverse data envelopment analysis (DEA) models for estimating potential gains from bank mergers for the top US commercial banks. The results show additional intermediate and final outputs at different predefined target levels of technical efficiencies.

Data Envelopment Analysis Algorithm of Enterprise Economic Benefits Based on Leapfrog Algorithm

“…Although the performance of the algorithm proposed in this paper is superior, the algorithm still has the problems of high computational complexity and high overhead in the actual system. erefore, the above problems need to be solved in the future [21][22][23][24][25].…”

Managing bank performance under COVID‐19: A novel inverse DEA efficiency approach

“…InvDEA has mostly been applied in the banking sector, with a particular focus on bank M&A (e.g., Gattoufi et al., 2014 ; Amin and Ibn Boamah, 2020 , 2021 ). In the M&A setting, two or more banks can be merged into a new bank, with the new inputs/outputs being the aggregated value of the independent bank's inputs/outputs before the merge.…”

“…Given the impacts of COVID‐19, many banks have witnessed their inputs and especially outputs, such as interest incomes or interest margins, decreasing, so the question of preserving their efficiency as good as it was before COVID‐19 has become important. To date, most InvDEA studies (e.g., Gattoufi et al., 2014 ; Amin and Ibn Boamah, 2020 , 2021 ) have focused on bank mergers and acquisitions (M&A); none has examined the impacts of such financial shocks, especially on the Islamic banking industry.…”

Avaliação do desempenho dos bancos brasileiros em operações de fusões e aquisições: uma análise DEA em dois estágios entre 2000 e 2018

“…Essas mudanças exigem que os bancos se adequem para que possam cumprir com eficiência sua função tradicional de intermediação financeira e ter uma rentabilidade adequada para sua sobrevivência. Isso gera alguns efeitos como a maior busca por parte dos bancos em operar com mais eficiência para serem competitivos (OTERO et al, 2020) e o desencadeamento de fusões e aquisições (F&As) que representam uma parte importante das mudanças no setor bancário (AMIN; IBN BOAMAH, 2021).…”

“…Há importantes contribuições na literatura sobre o tema abrangendo o mercado brasileiro (BARBOSA; ZILBER; LEX, 2011;BERGMANN et al, 2015;FARIA;PAULA;MARINHO, 2006;CARVALHO, 2018), outros países emergentes (ANTONIADIS; ALEXANDRIDIS; SARIANNIDIS, 2014;DU;SIM, 2016;SHANMUGAM;NAIR, 2004;WANKE;MAREDZA;GUPTA, 2017), com diferentes métodos e visões: utilizando o DEA inverso para destacar os ganhos financeiros potenciais para melhorar a eficiência em F&As (AMIN; IBN BOAMAH, 2021), utilizando DEA em oito países sob um período de crise mundial (GALARIOTIS et al, 2020), utilizando análise difference-in-differences (DID) para explorar como as aquisições afetam o emprego, a produtividade do trabalho (FUKUDA, 2020), utilizando DEA e DEA inverso para diferenciação de eficiência técnica e de escala (LIN; WANG; SHI, 2020).…”