Mergers and acquisitions have become the global trends. Based on the panel data of 43 commercial banks in Taiwan from 1997 to 1999, this paper estimates the technical inefficiency, allocative inefficiency, and cost inefficiency with the Cobb-Douglas function in FRONTIER Version 4.1 Battese and Coelli (1992). This paper further investigates the impact of bank mergers on the technical inefficiency and the cost inefficiency of the involved bank firms. The conclusions of this empirical study are as follows. First, bank mergers in Taiwan definitely can improve the cost efficiency of the involved banks. Second, the most obvious improvements of bank efficiency focus on the allocative efficiency.