Research on performance of M&A based on DEA: A Case Study of China Ping An Group M&A of Shenzhen Development Bank

Abstract

With the growth of economic globalization process, China’s insurance institutions have showed diversified development. In 2010, Ping An Insurance Group Company of China Ltd. (China Ping An Group) implemented a comprehensive acquisition of Shenzhen Development Bank. Aim. This paper makes an appraisal regarding six-year scale efficiency and technical efficiency of Ping An Group before and after the acquisition. Methodology. The investigation requires a wide range of meeasures such as data envelopment analysis (DEA) that is used in this paper, the profitability evaluation, business growth assesment. To build a reasonable bank performance appraisal system we used an estimation of quality of assets and solvency. Results. According to this research there is no obvious improvement of profitability and operating growth capacity in the financial indicators after the implementation of the merger and acquisition, and the decline in assets quality and solvency shows that the short term effect is not obvious also. However it has good efficiency and strategic significance in a longterm period. Conclusion. M&A transactions among financial institutions in China don’t render the synergetic effect on financial performance of the company in the short term that has been proved on the example of merger of the Shenzhen Development bank by Ping An Group group of companies.