Post Merger Performance of Selected Nigerian Deposit Money Banks-An Econometric Perspective

Author(s)

ONAOLAPO Adekunle , AJALA Oladayo Ayorinde ,

Download Full PDF Pages: 49-59 | Views: 387 | Downloads: 147 | DOI: 10.5281/zenodo.3413660

Volume 2 - August 2013 (08)

Abstract

The paper examined post merger performance of Nigerian banking sector with the aim of determining the effect and the extent to which merger influenced bank performance. A judgmental sample technique was used to select 15 listed commercial banks in Nigeria. Data were collected from the published annual reports and account of these banks and were analyzed using percentage and ratios. Multiple regressions were used in testing the hypotheses. The study revealed that there is a strong relationship between bank performance and merger (strategic decisions) – asset profile, capital structure, operating efficiency, liquidity risk and credit risk. That strategic decision has positively influenced bank performance. That on average, bank consolidation resulted into improved performance. The study therefore recommended that the management of the banks should embrace diversification and financial innovation on product strategies as this will help in generating more income for the banks. They should also try to use merger as a strategic tool which must be continuously applied and implemented. 

Keywords

Consolidation, Merger, Bank Performance, Asset Profile, Capital structure, Operating Efficiency, Liquidity Risk, Credit Risk. 

References

  1. Akpan, A.B. (2007): “Effectiveness of Bank Capitalization and Consolidation in Building Market Confidence”: An Assessment of Customers Perception in Nigeria. Abuja J. Bus. Admin., 1(2), December.
  2. Amedu, S. (2004): “Corporate Takeover, Acquisition and Merger”. The Nigerian Stockbroker, the Official J. Chartered Ins. Stockbrokers, January-March. Annual Reports of Banks (2001-2005) Annual Reports of Banks (2006-2010)
  3. Bello, M. S (2004): “Mergers and Acquisitions as a Strategy for Business Growth in Nigeria”. Nig. J. Acct. Res., 1 (1).
  4. De-Nicolo, G. (2003): “Bank Consolidation, Internationalization and Conglomeration”: Trends and Implications for Financial Risks. IMF Working Paper 03/158
  5. Imala, O.I. (2005): “Challenges of Banking Sector Reforms & Bank Consolidation in Nigeria”. Bullion, 29 (2).
  6. Kathy, L. (2005): Mergers and Acquisitions. Another Tool for Traders. Investopedia.
  7. Muhammed, R. (2005): “Understanding Mergers and Acquisitions”. Business Day Newspaper February 17th.
  8. Olagunju, A. Obademi, O. (2012) An Analysis of the Impact of Mergers and Acuisitions on Commercial Banks Performances in Nigeria. Pakistan Journal of Social Sciences. 9: 139-146.
  9. Osho, M. (2004): Consolidation through Merger and Acquisitions: The African Experience. Conference Proceedings on Consolidation of Nigeria’s Banking Industry, Central Bank of Nigeria, Abuja.
  10. Sanni, M.R (2009): “Short term Effect of the 2006 Consolidation on Profitability of Nigerian Banks”. Nig. Res. J. Accountancy. Inst. Chartered Account. Nig. 1 (1) October.
  11. Soludo, C. (2004): Consolidating the Nigerian Banking Industry to Meet Development Challenges. Discussion Paper, http:/www.thisdayonline.com/business.
  12. Uchendu, O.A. (2005): “Banking Sector Reforms and (6) Bank Consolidation”: The Malaysian Experience, Bullion, Central Bank of Nigeria, Abuja, 29(2), April/June.
  13. Uboh, G.A.T. (2005): Selected Essays on Contemporary Issues in Nigerian Banking System. Ibadan: University Press Plc.
  14. Umoren, A. O., Olokoyo, F.O.( 2007 ): Merger and Acquisition in Nigeria. Lagos Journal of Banking , Finance and Economic Issues, Vol 1, No 1, July, 2007.

Cite this Article: