The efficiency effects of bank mergers: An overview of case studies of nine mergers

This paper summarizes nine case studies, by nine authors, on the efficiency effects of bank mergers. The mergers selected for study were ones that seemed relatively likely to yield efficiency gains. That is, they involved relatively large banks generally with substantial market overlap, and most occurred during the early 1990s when efficiency was getting a lot of attention in banking. All nine of the mergers resulted in significant cost cutting in line with premerger projections. Four of the nine mergers were clearly successful in improving cost efficiency but five were not. It is not possible to isolate specific factors from these mergers that are most likely to yield efficiency gains, but the most frequent and serious problem was unexpected difficulty in integrating data processing systems and operations. (C) 1998 Elsevier Science B.V. All rights reserved.