The effects of mergers and acquisitions of universal and commercial banks in the Philippines
Date
2011-10
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Abstract
This paper analyzes the ·effects of mergers and acquisitions on the performances of Philippine universal and commercial banks from 1997 to 2010. Throughout the years, the Bangko Sentral ng Pilipinas has encouraged banks to merge through incentives and more liberalized policies in an effort to make them more efficient and more resilient to adverse shocks. However, studies have shown varying results on the benefits of mergers. The paper assesses the performances of the banks based on a simplified CAMELS model composed of different financial ratios computed using the banks' financial statements. CAMELS stands for Capital Adequacy, Asset Quality, Management, Earnings, Liquidity and Sensitivity to market fluctuations. The results of the time-series analysis show that mergers may indeed pose positive benefits; however, it does not necessarily make the merged banks better performing than other banks, suggesting the possibility of other motives for banks to merge.
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Keywords
Merger, Universal bank, Commercial bank