Katerina Fotova Čiković

Department of Economy, University North,

Croatia

kcikovic@unin.hr

ORCID 0000-0003-0138-1362

Do mergers and acquisitions improve bank efficiency? Evidence from North Macedonia

Joško Lozić

Department of Economy, University North,

Croatia

jlozic@unin.hr

ORCID 0000-0001-8983-2580

Marina Guzovski

Libertas International University,

Croatia

mguzovski@libertas.hr

ORCID 0000-0002-2365-503X

Abstract. This article focuses on the efficiency of commercial banks in North Macedonia in the period from 2007 to 2020. The main goal is to assess the relative efficiency of the banking sector as a whole, and more importantly, to evaluate and analyse the impact of mergers and acquisition (M&A) transactions on banks’ efficiency. For this reason, the leading nonparametric methodology Data Envelopment Analysis (DEA) has been employed, i.e., the window DEA model with two input and two output variables on a sample of 13 commercial banks. Based on balanced panel data from the banking sector of North Macedonia, the obtained results show a constant fall of efficiency of the whole banking sector, from 83.33% in 2007 to 70.06% in 2011 and 66.36% in 2020. The results of the M&A transactions case study analysis show that, in general, M&A transactions decrease banks' efficiency, i.e., they do not result in an efficiency increase. The contribution of the study is that it comprises the first study analysing the effects of banks' M&A on bank efficiency in the region of South-Eastern Europe with the application of DEA and thus, it provides valuable information for investors, bank management, M&A analysts, academic members and regulatory bodies.

Received: July, 2021

1st Revision: February, 2022

Accepted: May, 2022

DOI: 10.14254/2071-8330.2022/15-2/6

JEL Classification: G21, D24, G34

Keywords: M&A, data envelopment analysis, bank efficiency, commercial banks, window analysis