An analysis of the relevance of off‐balance sheet items in explaining productivity change in post‐merger bank performance: evidence from Malaysia

Sufian, Fadzlan; Ibrahim, Siti Noorjannah

doi:10.1108/01409170510784814

Cited by 26 publications

(29 citation statements)

References 25 publications

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“…Thus, our results suggest that no systematic decline in productivity caused by declines in net efficiency can be attributed to the 17 Sufian and Ibrahim (2005) reported average total productivity growth for post-merger Malaysian banks of -1.3 percent for the period 2001-2003. 18 This result is similar to findings by Orea (2002) on Spanish banks, Isik and Hassan (2003b) for Turkish banks and Casu, Girardone, and Molyneux (2004) on Spanish and Italian banks where technical change is the main determinant of productivity change.…”

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confidence: 70%

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

2011

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This study employs stochastic frontier analysis to analyze Malaysian commercial banks during 1996-2002, and particularly focuses on determining the impact of Islamic banking on performance.We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in costs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68 percent, with the latter driven primarily by technical change, which has declined over time.Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. However, our productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with rapid technical change, although this is not the case for conventional banks operating Islamic windows. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had a short-term cost-reducing effect in 1998, the crisis triggered a more lasting negative impact by increasing the volume of non-performing loans.

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confidence: 70%

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

2011

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“…The documented evidence on horizontal M&A studies in Malaysia is primarily on bank mergers that are 'involuntary' in nature and implemented right after the Asian financial crisis (Fauzias, Rasidah & Mohamed, 2005;Rasidah, Fauzias, Soo & Aisyah, 2008;Sufian & Ibrahim, 2005). Unlike the voluntary M&A which is mainly market driven, involuntary mergers are the result of direct government intervention (directives) and will affect the validity of the findings.…”

Section: Global Business Review 16(5s)mentioning

confidence: 95%

Do Malaysian Horizontal Mergers and Acquisitions Create Value?

Aik

Hassan

Mohamad

2015

Global Business Review

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This article examines the value-added phenomenon of Malaysian horizontal merger and acquisition activities (M&A) in the long run for the period 1994-2010. In this regard, this article used economic value-added (EVA) approach and cost-efficiency approach (stochastic frontier analysis (SFA)) to investigate synergistic benefits. The findings suggest that bidder firms experience no significant improvement in operating and financial efficiencies in the long run. Specifically, the operating performance of bidder firms deteriorated after the merger exercise, whereas the target firms had no significant improvement in operating performance over the same period. In summary, the findings suggest no synergistic gains from horizontal mergers in Malaysia. These findings imply that the long-run performance of firms in the horizontal mergers or acquisitions is driven by other motives rather than synergistic gains.

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“…They find that the average Thai bank experienced falling total factor productivity growth (TFP), while the average foreign bank experienced increasing TFP. In a study on the Malaysian banking sector, Sufian and Ibrahim (2005) applied the Malmquist Productivity Index method to investigate the extent of off-balance sheet (OBS) items in explaining the total factor productivity changes of Malaysian banks. They find that the inclusion of OBS items result in higher productivity levels of all banks.…”

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confidence: 99%

Financial Disruptions and Bank Productivity Growth: Evidence from the Malaysian Experience

Sufian

2009

International Economic Journal

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This paper examines, for the first time, the productivity of the Malaysian banking sector around the Asian financial crisis 1997. The non-parametric Malmquist Productivity Index (MPI) is used to compute individual banks' productivity levels. We find that the Malaysian banking sector has exhibited productivity regress due to the decline in efficiency. The results seem to suggest that the domestic banks have exhibited productivity progress attributed to technological change, while the foreign banks have exhibited productivity regress due to efficiency decline. We find that the large banks tend to experience productivity growth attributed to technological progress, while the small banks tend to experience productivity decline due to technological regress. The empirical results suggest that the small banks with its limited capabilities are at a disadvantage compared with their larger counterparts in terms of technological advancements, thus, rejecting the divisibility theory.Financial disruptions, bank productivity, Malmquist productivity index, Malaysia,

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An analysis of the relevance of off‐balance sheet items in explaining productivity change in post‐merger bank performance: evidence from Malaysia

Cited by 26 publications

References 25 publications

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

Do Malaysian Horizontal Mergers and Acquisitions Create Value?

Financial Disruptions and Bank Productivity Growth: Evidence from the Malaysian Experience

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