부산대학교 도서관

In recent years, a growing number of banks in Taiwan have considered using the mean of bank merger to obtain potential cost savings and scale or scope economies. This paper adopts the concept of thick frontier and cost function approach to simulate the potential cost savings from mergers of 47 Taiwanese domestic banks. We have also further decomposed such merger gains into gains from scale and scope economies and gains from x-efficiency improvement. The empirical results have shown that the cost savings from sample bank mergers are substantial for all merger cases. In addition, cost savings from bank mergers between different cost structure banks are found to be much higher than those from bank mergers between the same cost structure banks. The impact of adopting better production technology could result in an over 30% of cost savings from bank mergers.