BANK MERGERS IN CHILE: AN X-EFFICIENCY ASSESSMENT

During the last two decades, the Chilean banking system has experienced an increasing degree of industrial concentration via mergers among its institutions. Recent evidence suggests that these consolidation processes may bring significant benefits derived from the X-efficiency. The aim of this study is to empirically assess the effects of bank mergers in Chile on this class of efficiency, based on a profit frontier approach. In general, our results show a positive effect of bank mergers on efficiency standards. This suggests that reduction of X-inefficiencies should be an important element to consider when evaluating these processes from a private and public perspective.