Merger of Major Banks from the EVA Standpoint

Kazushi Kan and Taro Ohno
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Kazushi Kan: Belongs to the IT System Promotion Dept. of Sumitomo Mitsui Trust Bank, Limited and Former researcher, Policy Research Institute, Ministry of Finance
Taro Ohno: The Lecturer of the Department of Economics, Management and Information Science of Onomichi City University and Former Senior Research Fellow, Policy Research Institute, Ministry of Finance

Public Policy Review, 2012, vol. 8, issue 5, 737-774

Abstract: In this paper, I have reviewed the past 20 years (from FY1989 to FY2008) of performance of the major banks in Japan and the impact of mergers of the banks from the viewpoint of EVA (Economic Value Added), one of the management indices. As a result of my analysis, I first found that the EVA of the entire industry has been continuously negative except for around the middle of 2000s (from FY2005 to FY2007), which means the banking sector has not earned as much profit as expected by their shareholders up to this point. Also, although many major banks implemented mergers around the year 2000, not all the mergers have achieved successful result so far from the perspectives of EVA improvement. Based also on the result of empirical analysis, one of the important factors which contributed to the positive impact of merger is increase in loan market share, and it was proven that the higher loan market share the bank has acquired after the merger, the higher EVA it has achieved.

Keywords: EVA; Bank; Merger (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:mof:journl:ppr019g

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