Hypothetical potential merger in south eastern Chinese commercial banks An analysis of cost efficiencyTools Jingyi, Fu (2014) Hypothetical potential merger in south eastern Chinese commercial banks An analysis of cost efficiency. [Dissertation (University of Nottingham only)] (Unpublished)
AbstractThe objective of this paper is to use the estimation of x-efficiencies and scale efficiencies by the cost function of commercial banks operating in China to identify expected cost savings of the hypothetical potential mergers. The x-efficiencies of the banking industry increase dramatically since 2009 and their scale efficiencies show the inverted U-shaped curve that small banks have economies of scale while large banks have diseconomies of scale. The average scale inefficiencies are 14.38% and the x-efficiencies are 7.26%. The merger cost reduction is mainly affected by scale inefficiencies. The changing in input ratio also has an effect on the results in cost savings but the positive effect or negative effect may also influence by other reasons such as regulations or government policy.
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