Mergers & Acquisitions in the Indian banking sector and pre and post merger technical efficiencies - an empirical investigation

Mergers & Acquisitions (M&As) in the banking sector has been looked upon as an immediate mode for external growth. Market driven merger which are on gradual rise are outcomes of the post-reform period driven by the changes in competitive landscape of the Indian banking system which forced many of the incumbent banks to restructure themselves and boost their efficiency. The present study examines the technical efficiency of the nine select merged banks in the post-reform period. The study uses Stochastic Production Frontier Approach to measure the technical efficiency as a ratio of output to input. The study reveals that of the nine select cases of M&As, the merger deals of Union Bank of India and HDFC Bank only resulted in significant improvement in the technical efficiencies.