The impact of mergers and acquisitions on the performance of Turkish banks

The mergers and acquisitions in the Turkish banking system have accelerated following the 2001 crisis. The aim of this study is to analyze the effects of the merger and acquisition trends and provide policy implications in accordance with the findings. With this study, the effects of mergers and acquisitions on the efficiency, productivity, market structure and risk are analyzed. As a result of these mergers and acquisitions, how the performance of banks are affected are of great importance for possible mergers and acquisitions in the future.According to the results, the cost efficiency and scale efficiency of the merged banks are greater than the non-merged peers, whereas the non-merged banks are more profit efficient. The merger and acquisition activities are not found to have a significant effect on the cost efficiency, but a significant and positive effect on profit efficiency.The decline in the technical efficiency of the merged banks are thought to be the result of the incomplete adaptation process. Although, the non-merged banks have superiority over the merged banks on pure efficiency and total factor productivity change, the increase in their productivity is declining.When the effects of mergers and acquisition on the competition are analyzed, the consolidation are found to have a positive effect on the competition. The foreign bank penetration in the market also have a positive effect on the competition. The increase in the competition is not found to have an increasing effect on the risk of the sector.The overall results of the study indicate that mergers and acquisitions have a favorable effect on the performance of the Turkish banking system. In the following years, with the completion of the integration process of the merged banks, the performance of the banks are supposed to increase.