OFF-BALANCE SHEETS ITEMS AND POST-MERGER PRODUCTIVITY: AN EMPIRICAL STUDY OF INDIAN COMMERCIAL BANKS
Abstract
The purpose of this article is to investigate the effect that mergers and acquisitions have had on the efficiency of the Indian banking industry. When assessing total factor productivity change indexes of the acquirer banks in post-merger periods with the application of semi-parametric Malmquist productivity index, the study attempts to investigate the significance of include off-balance sheet (OBS) items in the definition of banks' outputs. The empirical analysis of the study comprised participation from six Indian commercial banks in the merger that took place between 2017 and 2021. The necessary information was taken from the annual reports of the various banks that were accessed through the websites of the BSE and the NSE. The study found that including non-interest income in efficiency measurements lowers bank productivity. The percentage drop is modest and appears to be more due to technology than efficiency. The increased non-interest income share of acquiring banks after the merger does not increase bank efficiency.
Keyword : M&A, Off-balance Sheets’ Items, Non-interest Income, DEA
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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