The Research On Conparison Of Bank M&A Between China And Foreign Countries

Since2008, the global financial crisis caused by U.S. subprime mortgage crisis severely tested the global banking industry and lots of criticism. The transformation of Wall Street not only exposed the fragility of the banking industry, also led to thinking about direction of the transformation and business models of bank in the future. Although the current debt crisis is not still in fermentation, the negative impact of the financial crisis continues, recovery of the global economic and financial market is still a lack of strong support. But, overall, after the crisis, for the banks of narrow scope of business, small assets, their anti-risk capability and viability of the reverse cycle is relatively weak. While the large banks which keep on the way of adherence comprehensive and international operations in long-term have the strong viability although they suffered some losses during the crisis.So, large banks have high security and sustainable development capacity. To become a large bank, it is practical to develop gradually through the accumulation of endogenous approaches, or expands quickly through mergers and acquisitions and so on. According to the experience of HSBC, Citibank and other advanced international Bank. All the large banks eventually pay attention to the accumulation of endogenous and seize the opportunity moment to leap through acquisitions. To this end we believe that, in the current and future period, although the similar discussion of "how much value the mergers and acquisitions of bank can create in the end," will not stop, the issue of the mergers and acquisitions of bank is both theoretical and practical.Therefore, the basic purpose of this paper is to enhance the competitiveness of bank of China, the principle is to deepen the financial reform, to study the mergers and acquisitions of bank. With the relevant modern economics theory, analysis the intrinsic nature of this economic phenomenon about the mergers and acquisitions of bank, study and discuss the issues on the motives for the mergers and acquisitions of bank and the performance and the motivation patterns of performance and so on. During the study, we found that the study at home and abroad on mergers and acquisitions of bank have made great progress, particularly the study on abroad. As to the motivation for mergers and acquisitions of bank, the study sum up a series of ideas, including improving the operational efficiency, reducing the transaction costs and the risk dynamics, obtaining synergies, etc.; Meanwhile, the research on M&A performance with theoretical discussion and empirical analysis provides a high starting point and many favorable conditions for the study of this paper. Of course, this study is based on the research result of giants and reference to the new perspective of" Domestic and Foreign Comparative Study", By comparing the difference between motivation and performance&motivation model of performance of the banks of China and Foreign Countries, analyze deeply the underlying causes of the difference, try to provide valuable reference for how to implement the correct theory of Bank M&A activity in our country.In Summary, this paper puts forward such several preliminary conclusions: firstly, it is emphasized that the global financial crisis did not alter the development trend of international banking. M&A are still an important way for China’s banking to be bigger and stronger and to catch up with the advanced. They should be encouraged continually, put into practice bravely. Secondly, it is emphasized that bank M&A must adhere to the posture of opening up and global vision, that is to say, neither limited in domestic, nor refuse of the external forces. Stones from other hills may serve to polish the jade of this one. Bank M&A must strengthen all-round cooperation with foreign strategic investors under the prerequisite of the equality and mutual benefit, and introduce good system on the basic of introducing the foreign capital to enhance the development ability. Thirdly it is emphasized that the government should act actively. The legal system and regulatory rules need to be further improved in order to create good environment and provide policy support which can speed up our bank M&A. Especially, on condition that persist in efficiency, safety, moderate scale, try to promote the M&A between banks and non-bank financial institutions, between financial institutions and part of the industry and commerce. And try to build several truly comprehensive and competitive "financial flagship" in the city China’s financial center, so as to win new advantage and dominant position for China’s banking sector in future global Competitive market. Text is divided into six chapters, the specific structure as follows:Chapter One:Introduction. Defining the concept of merger-related from the background and significance of research; reviewing the research on mergers and acquisitions at home and abroad; describing the ideas, methods and structure arrangements of the full text.Chapter Two:Theoretical analytical framework of Comparison of Bank M&A between China and Foreign Countries. Propose the three perspectives which form the analytical framework of the full text:motivation perspective, performance perspective and perspective of the dynamics model of performance; Summarizing the two micro-macro motivation. Proposing financial and two performance evaluation index of productivity (size, technology), and analyzing the type of motivation model of the M&A performance. Proposing two hypotheses based on motivation model of the M&A performance and the motivation model of the M&A performance, and establishing the theoretical analysis framework for the comparative of the later chapters.Chapter Three:The comparison on the motivation of Bank M&A between China and Foreign Countries. Through carding the M&A process, Introducing motivation of foreign and domestic bank mergers and acquisitions and changing in the process. Summing up the different characteristics of banking M&A between China and Foreign Countries, providing a theoretical reference for China’s banking industry M&A in the future.Chapter Four:The comparison on performance of typical Bank M&A between China and Foreign Countries. Introducing a typical case of bank M&A at home and abroad, analyzing and comprising the typical case. Analysis and comprise the performance of typical abroad commercial banks and typical domestic commercial banks by Factor Decomposition of Financial Indicators and Date Envelopment Analysis, such as Citibank and Industrial Commercial Bank, HSBC and Shanghai Pudong Development Bank. And then, General conclusions are drawn by comparing the performance.Chapter Five:The comparison of motivation mode of Bank M&A performance between China and Foreign Countries. Through the selection of a number of variables, regression analyzing pure technical efficiency and scale efficiency measure base on DEA Measurements, revealing the different characteristics of motivation mode of Bank M&A performance between China and Foreign Countries base on Mathematical Statistics. This can provide valuable reference to development of China’s banking industry mergers and acquisitions. At the same time, through quantitative analysis, verifying the two theoretical hypotheses in the second chapter.Chapter Six:The policy recommendation of promoting the healthy development of China’s banking industry mergers and acquisitions. Analyzing the development trend of international banking in the future and obstacles and difficulties of China’s banking industry mergers and acquisitions. Combined with the previous findings, proposing some policy recommendation of promoting the healthy development of China’s banking industry mergers and acquisitions.The innovation of this paper:First, On the basis of existing research, it creatively takes "the comparison of domestic and foreign" which is about the bank mergers and acquisitions. Through the "Trinity" perspective of motivation model which includes motivation, performance, and motivation mode of performance, it builds a theoretical framework which is about Comparative study of mergers and acquisitions. Currently, analysis and comparison of motivation and performance singly is not uncommon. But, to demonstrate the "motivation model of the performance", combining motivation and performance, it has a certain innovation t. it reveal the performance gap of the bank mergers and acquisitions in structural causes. Second, this study do a case analysis which about the comparison of domestic and foreign, Through collecting and summering a large number of typical domestic and foreign banks’annual reports, which from three major state-owned banks such as ICBC, Bank of China, Construction Bank; joint-stock banks such as Shanghai Pudong Development bank, Industrial development bank; six foreign Bank such as JP Morgan Chase, Citigroup, Bank of America, HSBC, Standard Chartered, Japan’s Mitsubishi Tokyo FJT since2000. This study Come to the conclusion that comparative performance of bank mergers and acquisitions by taking DEA efficiency measures and regression analysis. Especially, this paper introduces the parametric analysis. Basing on Ricardo Correa (2008) regression model, where it set the two indicators which are "pure technical efficiency" and "scale efficiency" as the measure of DEA, anglicizing the different effects of mergers and acquisitions performancewhich cased by macro-and micro-motivation motivation. Proposing and verifying two theoretical hypotheses (Hypothesis one: the size efficiency of bank M&A performance cased by macroscopic motivation is significant inevitably, but the pure technical efficiency is not necessarily significant; If and only if the macroscopic motivation are content-type cross-border mergers and acquisitions, the acquisition is also statistically significant. Hypothesis two:under the micro-motivation, the pure technical efficiency cased by Content-type growth motivation is statistically significant; the scale efficiency cased by epitaxial growth motivation is also statistically significant. See Chapter two). The Study on bank M&A performance is mostly using DEA measurement methods financial indicators analysis, but the measured regression by parametric analysis is few. It is an innovation in this paper. Third, Based on the theoretical analysis and empirical research, Experience determine and data support, the study propose six M&A model, then, it also propose some suggestion, that in the premise of preventing risk effectively, financial regulators should support M&A of domestic banks in domestic and foreign markets. Government and the banks achieve a win-win, though the M&A cased by micro-motivation(market mechanism),macroscopic motivation(stabilize financial syste、enhance external competitiveness) and ultimate goal of the Bank(upgrade "pure technical efficiency" and "scale efficiency").The limitations of this study have two sides. First, due to our bank mergers and acquisitions market is still in its infancy, and particularly it did not occur the "strong and strong merged" like Citibank acquired Travelers, it can not reflect the performance impact caused by mergers and acquisitions, so, it can illustrate the problem to the analysis of M&A performance, but the lack of precision(In August2010,Ping An of China held90.75%stake of Ping An Bank and subscribe for52%shares of Shenzhen Development Bank.the transaction amounted to29.1billion.it is a typical study case of "strong and strong merged" in china in the future study. Second, the limitations of this study is that the lack of adequate statistical data. It is difficult to quantify the full performance of M&A, to reduce the rigor of the paper analyzes’ process and the conclusions. And these two sides will be the important direction of the future research.