Mergers and acquisitions in few banking organizations are covered here. All aspects of banking business are being radically transformed and to an extent that is changing the fundamental economics of the banking firm and the banking industry. A laboratory for innovation october 2011 pakistan is one of the fastest developing markets for branchless banking in the world. As per the policy of state bank of pakistan only bank led model of branchless banking is allowed for the establishment of bb setup. Mergers and acquisitions in indian banking sector a. The banking industry commercial banks constitutes a major part of the u. Branchless banking as a financial solution for unbanked. Regulation of branchless banking mark pickens, cgap mark pickens, cgap bangkok bangkok june 24, 2008 june 24, 2008. Thus, the type of industry does seem to make a difference to the acquiring firms post merger operating performance. Among eight branchless banking products, five are telcoled branchless banking products offered by telecom operators with the help of financial institutions. One of the principal objectives behind the mergers and acquisitions in the banking sector is to reap the benefits of economies of scale. Bank merger policy and the new cra data federal reserve.
This merger would create waves in the global telecommunication market. The economics of branchless banking this setup is called agent or branchless banking. The benefits and dangers of bank mergers and acquisitions. Policy objectives and regulatory options 1 according to porteous 2006, branchless banking can be either additive or transformational. Banks still think they need branches, but banks are notorious for bad ideas. Chapter3 mergers and amalgamations in the banking sector of. Second, we use balancesheet information to study the characteristics of merger acquirers and targets before and after legislative amendments. These models tend to be transformational both in expanding the number of people with access and in the quality of service offered, as the. It exposes the design tradeoffs that occur at the each of the key layers of service. Substantial gains from mergers are expected to come from cost savings. Branchless banking bb is one of the marvels of innovation in the fields of information communication technology ict and bpr business process reengineering. A large number of international and domestic banks all over the world are engaged in merger and acquisition activities. Not only does an acquisition give your bank more capital to work with when it comes to lending and investments, but it also provides a broader geographic footprint in which to operate. Branchless banking is defined as the delivery of financial services outside conventional bank branches, often using agents and relying on information and communications technologies to transmit transaction details typically cardreading pointofsale pos terminals or mobile phones.
These regulations allow only banks and financial institutions to issue basic savings accounts. Transaction economics for technology enabled branchless banking. This new third edition has been fully revised and updated to reflect the major changes that have taken place in the banking sector and presents many additional topics including new coverage of. In most banking cases the institutions are publicly owned with an established mandate to serve the mass market the objective of the move is explicitly to expand the outreach of banking services.
Clear regulations and a regulator that is willing to both listen to the private sector and provide incentives for innovation have promoted a dynamic branchless banking sector. Among eight branchless banking products, five are telcoled branchless banking products offered by telecom operators with. To use only plausibly exogenous variation, i focus on mergers between large banks i. Branch banking, bank competition, and financial stability. The economics of banking describes and explains the behaviour of banks by examining trends and operations in banking within a mathematically accessible microeconomic framework. Merger activity in banking sector of pakistan picks up by the liberal reforms announced by central bank of pakistan in 2002. Branches cost money, and the have lines of customers getting irritated for waiting. The rise of branchless banking financial services analysis. Our goal is to put as much power as possible in your hands. Transaction economics for technology enabled branchless.
The indian telecom giant bharti airtel is in talks for a merger with south african mtn. The main motive behind the merger and acquisition in the banking industry is to achieve economies of scale and scope. Some of the specific issues highlighted in the paper cover the merger policies of rbi, competition regulation issue between cci and rbi, etc. Microsave recently released a report on how the adoption of mobile and electronic payments is increasing leading to the emergence of a cashlight economy in india. The effect of branchless banking strategy on the financial performance of commercial banks in kenya article pdf available september 2017 with 2,426 reads how we measure reads. These channels are less expensive and more adaptable than the traditional bank branch, bringing more people into formal finance. The web share of traditional banks was analyzed in last months cover article, remote banking rankings. The use of economics in competition law 2005, jan 27, brussels the views expressed herein are not purported to reflect those of the federal trade commission, nor any of its commissioners. Pdf the effect of branchless banking strategy on the.
First, we use a wellknown automated analysis tool on all 46 known android mobile money apps across all 246 known mobile money systems. Update on regulation of branchless banking in kenya january 2010 this update of cgaps 2007 notes on regulation of branchless banking in kenya1 incorporates research conducted by cgap in january 2010 regarding relevant legal and policy changes through the end of 2009. The economics of banking third edition kent matthews and john. Why em banking will soon reach scale in india pdf branchless banking in. There are various factors which are responsible for mergers and acquisitions in pakistan. By highlighting the opportunities and challenges with branchless banking, the aim is to show that it is possible to lift the welfare of low. The ability to receive text messages for twofactor authentication. Why branchless banking will soon reach scale in india. All content is freely available in electronic format full text html, pdf, and pdf plus to readers across the globe. View branchless banking research papers on academia. Feb 10, 2017 cost to the bank, convenience for you. For more information on allowed uses, please view the cc license.
It is the mode of rendering financial services through distribution network without having conventional branch brick and mortar set up. Devarajappa s 2012 in their research explored various motives of merger in the indian banking sector. As branchless banking regulations provide an enabling environment for m banking, banking agents act on behalf of banks and convert virtual money into physical cash ivatury and mas, 2008. Digital financial services in indonesia findings from. It is additive when it merely adds to the range of choices or enhances the convenience of existing customers of mainstream financial institutions. Icici one of the largest financial institution was formed in 1955 at the initiative of the world bank, the government of india and representatives of. Present report focuses on the impact of choice of technology on agent economics. In addition it can enfuel ecommerce and the concept of. Banks are finding creative ways to reach customers with savings, credit and moneytransfer products. After the pnballied bank merger, the combined entity is expected to fortify its position as the fourth largest privately owned domestic bank in terms of total assets. Account type description transaction limits maximum balance limit level 0 basic bb account with low kyc requirements and low transaction limits rs. The early experience with branchless banking by gautam.
Tan group sells oceanic bank the uaes last successful bank merger was the 2007 union of national bank of dubai and emirates bank to form emirates nbd. You can also always access simple by logging in to our mobilefriendly website. Both the country reports and focus notes 38 and 43 are available online at cgaps website. A bank merger helps your institution scale up quickly and gain a large number of new customers instantly. One consequence of the current merger trend in the banking industry has been heightened interest in the analytical framework and data used by federal. A study based on pakistan batool, hina, raza, saleem on. The banking sector of pakistan showed drastic changes from the past few years due to the liberal reforms taken by sbp. Wheelock and wilson 2004 find that expected merger activity in us banking is positively related to management rating, bank size, competitive position and geographical location of banks and negatively related to market concentration. Efinancial services pillars services transfer ecommerce payment to billers micro finance gov.
Thus, the type of industry does seem to make a difference to the acquiring firms postmerger operating performance. Because finance is about exchanging the cash people need on a daily basis for promises of value, and vice versa, proximity is objective number one. If values1,2,3,4, then merger of 3,4 reduces winning bid from 3 to 2. Provides a formal analysis of the economic drivers for branchless banking solutions. The economics of branchless banking mit press journals. Pdf analysing the motives and the outcomes of bank mergers. Branchless banking has great potential to extend the distribution of financial services to poor people who are not reached by traditional bank branch networks. The project aims to understand the behavior of various mergers and acquisitions in indian banking sector. One very important impact of the choice if technology is on the viability of the business model. The ability to view portable document format pdf files. Estimation of the impact of mergers in the banking industry. Abstract there is a longstanding debate about the special nature of banks. Chapter3 mergers and amalgamations in the banking sector.
Firstly, we have compared the characteristics of acquiring. So far in the first 6 months of 2009, indian bound mergers and acquisitions abroad have only been rs 20 billion live mint, 2009. The potential of branchless banking is immense and can single handedly light an economic revolution is pakistan. We have examined in this study the bank mergers experience in lebanon, where between 1994 and 2002, 25 bank merger operations took place. We identify legislative changes strengthening competition policy in industrial countries, analyze their impact on. The full paper can be downloaded at the link below. To understand the factors driving bank merger mania it is necessary to examine the evolution of the banking cycle that has brought us to this point. Technology is usually assessed in terms of convenience of conducting transaction, user interface, portability etc. Merger of two weaker banks or merger of one health bank with one weak bank can be treated as the faster and less costly way to improve profitability then spurring internal growth franz, h. During the 1970s and early 1980s, many banks and savings and loans were formed for varying reasons. It has the potential to radically reduce the cost of delivery. By deploying ratio analysis, kemal 2011 examined the postmerger financial performance of. We then methodically select seven androidbased branchless bank. Currently, eight branchless banking service providers have developed a network of 125,000 agents to provide branchless banking services 9.
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