The impact of mergers and acquisitions on the efficiency of GCC banks

This study provides an empirical assessment of banking consolidation of commercial banks in Gulf Cooperation Council (GCC) countries. The DEA was used to trace the impact of Mergers and Acquisitions (M&A) on the technical efficiency of banks involved in the consolidation. The study considered 42 commercial banks over the period of 2003- 2007, 10 among them were involved in a consolidation activity during the period considered. By comparing the performance of the ten banks involved in consolidation with that of the whole sample and with those banks that did not go through consolidation, meaningful conclusions were made. The major result was that, though it was limited, there was a positive impact of M&A on the performance of commercial banks. Moreover, most of the banks involved in M&A realized an improvement higher than the average realized by the full sample, and hence improved their performances faster than the market.