| dc.description.abstract | The major banks based in Kenya have embarked on an aggressive expansion to the East
Africa market with the sole purpose of taping into the larger market. These banks have
adopted different entry strategies in these markets depending on the suitability of the
strategy in the different countries. With only a small percentage of the population
banked, there is need for banks to strategise and reach out to more of the un-banked,
which would constitute a big business growth in the region. Therefore, expansion
strategy is vital to the adaptation of the changing business environment. This study
therefore sought to investigate the extent to which the strategy of mergers and
acquisitions has been adopted by these banks in expansion and the appropriateness of
the entry strategy within East African market. This study adopted a census survey
design. The population comprised the six major banks which were those licensed to
operate by the banking Act as at April 30, 2012. The research instrument of data
collection was a questionnaire consisting of structured and unstructured questions.
Secondary data was also used to obtain the required information. Secondary data
included reports to shareholders, public records banking surveys and economic reviews
from central bank supervision annual reports. The researcher found out that the
institutions adoption of the strategy was guided by the need to increase the level of
share capital, expanding distribution network, increasing the market share but the most
important was to benefit from best global practices. The researcher also found that
among the motives of mergers and acquisition, differential efficiency, operation
synergy, market share and market penetration informed the adoption of the strategy to a
great extent. Others such as agency problem, tax benefit and pure diversification
influenced the decision only to a little extent with the latter only having a moderate
influence. The study therefore recommends that for commercial banks to successfully
undertake their expansion by adoption of mergers and acquisitions they should ensure
that they use the best practice and ensure that they critically analyze and understand the
target institutions, be financially stable to implement the expansion, ensure that there is
an attractive market before expanding and have appropriate and adequate workforce to
implement the expansion. | en |
