Factors Influencing Mergers and Acquisitions on the Performance of Commercial Banks in Kenya: Case of Cfc Stanbic Bank, Nairobi County

Abstract

Mergers and acquisition refers to where two or more financial entities combine corporate resources to operate as a unit with an aim of improving their performance. Previous study on this topic give conflicting findings on how commercial banks performance react to merger and acquisition The objective of the study is to investigate the effects of merger and acquisition on the performance of commercial banks in Kenya being guided by the following objectives; to examine the influence of capital base of the mergers and acquisitions; to determine the influence of customer service delivery on the performance of commercial banks; to establish the influence on customer base on the performance of commercial banks and to examine whether cost of the process has influence on the performance of commercial banks in Kenya. The study intended to address challenges and problems faced in the Mergers and Acquisition process in relation to commercial banks from to reinstating public trust and to ways of increasing profitability and also to examine if merger and acquisition will facilitate economic growth and stability in the banking sector in Kenya. The study was guided by Free Cash Flow Theory with the conceptual framework displaying the relationship between the independent variables and the dependent variable; this study adopted the use of descriptive survey research design and involved a population of 159 respondents that brought about a sample size of 112 using stratified random sampling. Data analysis was done and findings presented in frequency and percentage tables. The study found out that bank‟s usually go through the M&A process because one of them is not being profitable hence not guaranteeing profitability after the process, that from respondent‟s experience the banks should adopt a hybrid mode of communication and so they still use the same platforms to communicate whereas the cost of legal counsel influences the budget for the overall M&A Process. The study recommends that commercial banks involved in M&A‟s should always consider their customers‟ welfare, opinions and needs. The changes brought about by the process should not disrupt but rather enhance a friendlier affordable customer experience.