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Merger and acquisitions in South African banking: A network DEA model

Peter Wanke, Andrew Maredza and Rangan Gupta ()

Research in International Business and Finance, 2017, vol. 41, issue C, 362-376

Abstract: Banking in South Africa is known for its small number of companies that operate as an oligopoly. This paper presents a strategic fit assessment of mergers and acquisitions (M&A) in South African banks. A network DEA (Data Envelopment Analysis) approach is adopted to compute the impact of contextual variables on several types of efficiency scores of the resulting virtual merged banks: global (merger), technical (learning), harmony (scope), and scale (size) efficiencies. The impact of contextual variables related to the origin of the bank and its type is tested by means of a set of several robust regressions to handle dependent variables bounded in 0 and 1: Tobit, Simplex, and Beta. The results reveal that bank type and origin impact virtual efficiency levels. However, the findings also show that harmony and scale effects are negligible due to the oligopolistic structure of banking in South Africa.

Keywords: Banks; South Africa; Merger and acquisitions; Network; DEA; Robust regression analysis (search for similar items in EconPapers)
JEL-codes: C6 G21 G34 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Merger and Acquisitions in South African Banking: A Network DEA Model (2016)
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