The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector
By employing data on 337 bank-year observations, the paper examines the impact of consolidation on efficiency and competition in the Malaysian banking sector during 1996–2008. We employ the Panzar-Rosse (P-R) H-statistic method to evaluate the degree of competition, while Data Envelopment Analysis (...
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| Format: | Article |
| Language: | English |
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Oxford University Press
2011
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| Online Access: | http://irep.iium.edu.my/5195/ http://irep.iium.edu.my/5195/1/Sufian__%282011%29.pdf |
| _version_ | 1848776457935912960 |
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| author | Sufian, Fadzlan |
| author_facet | Sufian, Fadzlan |
| author_sort | Sufian, Fadzlan |
| building | IIUM Repository |
| collection | Online Access |
| description | By employing data on 337 bank-year observations, the paper examines the impact of consolidation on efficiency and competition in the Malaysian banking sector during 1996–2008. We employ the Panzar-Rosse (P-R) H-statistic method to evaluate the degree of competition, while Data Envelopment Analysis (DEA) is employed to compute the efficiency of individual banks. The empirical findings from the DEA suggest that the Malaysian banking sector has been relatively inefficient in their intermediation function during the post-merger period. On the other hand, we find that the Malaysian banking sector has been relatively more efficient during the post-merger period under the revenue approach. The test of market contestability by using the P-R method seems to reject both monopoly and perfect market competition conditions indicating monopolistic market behaviours among banks operating in the Malaysian banking sector. |
| first_indexed | 2025-11-14T14:30:24Z |
| format | Article |
| id | iium-5195 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T14:30:24Z |
| publishDate | 2011 |
| publisher | Oxford University Press |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-51952013-06-28T02:42:54Z http://irep.iium.edu.my/5195/ The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector Sufian, Fadzlan HG1501 Banking By employing data on 337 bank-year observations, the paper examines the impact of consolidation on efficiency and competition in the Malaysian banking sector during 1996–2008. We employ the Panzar-Rosse (P-R) H-statistic method to evaluate the degree of competition, while Data Envelopment Analysis (DEA) is employed to compute the efficiency of individual banks. The empirical findings from the DEA suggest that the Malaysian banking sector has been relatively inefficient in their intermediation function during the post-merger period. On the other hand, we find that the Malaysian banking sector has been relatively more efficient during the post-merger period under the revenue approach. The test of market contestability by using the P-R method seems to reject both monopoly and perfect market competition conditions indicating monopolistic market behaviours among banks operating in the Malaysian banking sector. Oxford University Press 2011-07-12 Article PeerReviewed application/pdf en http://irep.iium.edu.my/5195/1/Sufian__%282011%29.pdf Sufian, Fadzlan (2011) The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector. IMA Journal of Management Mathematics, 22 (4). pp. 419-444. ISSN 1471-678X http://imaman.oxfordjournals.org/ DOI:10.1093/imaman/dpr015 |
| spellingShingle | HG1501 Banking Sufian, Fadzlan The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title | The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title_full | The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title_fullStr | The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title_full_unstemmed | The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title_short | The nexus between financial sector consolidation, competition and efficiency: empirical evidence from the Malaysian banking sector |
| title_sort | nexus between financial sector consolidation, competition and efficiency: empirical evidence from the malaysian banking sector |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/5195/ http://irep.iium.edu.my/5195/ http://irep.iium.edu.my/5195/ http://irep.iium.edu.my/5195/1/Sufian__%282011%29.pdf |