Determinants of merger and acquisition activity in Australian cooperative deposit-taking institutions

Abstract

A two-stage procedure is employed to evaluate the determinants of merger and acquisition (M&A) activity in Australian credit unions over the period 1992/1993 to 1994/1995. In the first stage, data envelopment analysis (DEA) is used to calculate technical and scale efficiency indices for a sample of credit unions. The second stage uses a multinomial logit model to relate credit union efficiency scores, along with other managerial, regulatory and financial factors, to the probability of credit unions acquiring or being acquired by another credit union. The results indicate that asset size and quality, management ability, earnings and liquidity are a significant influence on the level of M&A. One primary influence on credit union acquisitions would appear to be the perceived compatibility in associational bond and membership.