The Financial Performance of Banks Acquisitions by Foreign Financial Institution in Taiwan

• Main Authors: Mei chun Lin, 林美均
• Other Authors: I-Jeh Yeh
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/76904757577648085421

碩士 === 世新大學 === 企業管理研究所(含碩專班) === 97 === In recent years, the Taiwan government, fully dedicated to enhance the competitiveness of the financial industry, launched a series of financial reform and liberalization aimed at keeping the domestic banking sector to be on par with foreign banks, and at the same time improve the domestic investment environment, all with the hope to attract foreign capital to invest in Taiwan. In the wake of trade liberalization, internationalization, and fierce competition, corporate is forced to adopt radical measures such as mergers and acquisitions in order to survive in the difficult business environment. And for foreign banks trying hard to gain market shares in Taiwan, also increase business operation via cross-border M&A to enhance profitability on one hand, and closely heed the need of local market on the other hand. In this study, I examine the cases involved cross-border mergers and acquisitions of domestic financial institutions by foreign banks, using six dimensions of the CAMELS rating system - capital adequacy, asset quality, management capacity, profitability, liquidity and sensitivity to market risk - to explore overall financial performance of the cases studied. Empirical Results indicated that the foreign banks can improve the profitability of ailing domestic banks post-merged. But the operation capacity has yet to be strengthened after M&A. By and large, overall performance after M&A is shown to be positive for all the cases studied. This study can inform our understanding of the motives behind foreign banks involving the M&A activities in Taiwan. The main rationale is that foreign banks can improve the profitability of ailing domestic banks post-merged. Follow-up researches are recommended to incorporate non-financial variables, using different analytical research tools, or choosing the partially foreign ownership of domestic banks as study sample.