A Study on the Performance of Mergers among Credit Cooperatives

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The performance of mergers among credit cooperatives in Japan is analyzed with the 19 financial ratios representing profitability, liquidity and productivity and so on, made from financial data for the period of 1975 through 1981 based on 18 merging credit cooperatives and paired nonmerging credit cooperatives chosen from those with the closest amount of deposit in each prefecture. For those two groups of merging and nonmerging credit cooperatives, the test is conducted to examine the difference of financial ratios between before and after date of merger. When there exists the difference in only one or two groups, that is, there exists the effects of mergers, which is shown by examining the relative size of each ratio. Further, we examine the yearly effects by the difference of merging and nonmerging credit cooperatives with univariate and multivariate analysis. We could have a conclusion that merger has rather negative performance among credit cooperatives and merging credit cooperatives exhibit inferior financial characteristics to nonmerging ones.Secondly, we conducted two types of questionnaire surveys, one for directors of credit cooperatives, another for members of labor union (Zensinren). The motives for mergers by directors are 1) by the guidance of administrative authority, 2) talks among top management, with the opposite order by the union members. Other items like problems after mergers, objectives of mergers, there are not so many differences among the two surveys.Thirdly, mergers among the different financial institution, such as credit cooperatives and credit associations are examined with the data of 9 pairs merged form 1968 to 1975. The result is also the same as before.