Effect of mergers and acquisitions on financial performance of commercial Banks in Kenya
Abstract
In the conduct of this research, it was found that mergers and acquisitions are more prevalent
in the western world hence a local aspect research into this would be welcome. Mergers and
acquisitions have been pointed out in various studies especially in the western world as a
factor affecting financial performance of commercial banks. The objective of this research
was therefore to determine the effect of mergers and acquisitions on the financial performance
of commercial banks in Kenya. To do this, the research undertook a census study on the 16
banks that have under gone mergers and acquisitions between the year 2000 and 2012 so as to
bring as much recency as possible to this research.
This research used secondary data such as financial statements of the commercial banks
themselves and the Central Bank of Kenya (CBK) reports from which the research undertook
comparative analysis on the bank’s performance pre and post merging to establish whether
mergers lead to improved financial performance.
Causal research design was used where banks’ performance was analyzed 4 years before and
after the merger with the aid of statistical tools to determine whether there was any effect on
the financial performance.
This research found that there was improvement in financial performance of commercial
banks after a merger or acquisition. This conclusion was reached due to there being a general
increase in the profitability, capital adequacy and long-term solvency of the commercial banks
after a merger or acquisition.
Citation
Master Of Business Administration, University Of Nairobi, 2013.Publisher
University of Nairobi School of Business