An analysis of the performance of Merger and Acquisition (M&A) of some selected Indian Commercial Banks during 2000-2015

Abstract

The performance of M&As (Merger and Acquisitions) of five selected commercial banks, which are taken from public sector & private sector in India, in terms of financial ratio analysis supported by appropriate statistical & econometric techniques along with the extensive analytical feedback received from executives who formalize M&As (Mergers and Acquisitions) of selected banks in India, displays a mixture of optimistic and pessimistic results while comparing and contrasting the outcomes during before and after merger period. The trend for this performance has been intensively researched in this study. Therefore, the objective behind the research is to analytically examine and assess the performance of M&As (merger and acquisition) of some selected banks for a period of 15 years starting from the year 2000-01 and ending on 2014-15 in light of different parameters. The research has tried to examine and check whether there present any noteworthy differences in the outcomes attained by banks after M&As. Main outcomes of the present work are not in line with the prevailing opinion. To be more specific, we have found that majority (nearly two-third) of financial parameters of all 5 merged banks have really positive significant impact and the remaining one-third of parameters approximately does not display any noteworthy effect on merged banks. Therefore, we may conclude from the above results that majority of the bank mergers may have positive impact in terms of numerous economic parameters in post-merger period of some selected merged banks. This experimental study based on managers’ survey examines that although new geographical area (NGA), cost advantage (CA), size advantage(SA), customer base (CB), inorganic growth (IG), HR integration (HRI), shareholders’ value (SV), brand quality (BQ), financial inclusion (FI), technological advantage (TA), compliance with more regulations (CWR), corporate governance (CG), risk perception (RP), corporate social responsibility (CSR), Non-Performing Assets (NPA) are treated as the vital strategic issues behind M&As (merger and acquisitions) of selected banks. The OLM (ordinal logit model)tells us to deduce that majority of the executives/managers ponder that corporate governance (CG), in particular, has vital and noteworthy effect on the decision of M&As (merger and acquisitions) of selected banks. Other prominent factors stated above are not so vital in determining M&As (merger and acquisitions) decision of Indian banks as our ordinal regression outcomes advocate the same.