| dc.description.abstract | Mergers and acquisitions (M&A) are being increasingly used world over for improving
competitiveness of companies through gaining greater market share, broadening the
portfolio to reduce business risk, for entering new markets and geographies, and
capitalizing on economies of scale not forgetting strategic positioning. The main
objective of this study was be to establish whether M&A’s have any effect on the
profitability of commercial banks in Kenya. The following aspects were the specific
objectives of the study; to examine the effect of capital base on profitability of mergers of
commercial banks in Kenya, to determine how efficiency because of mergers and
acquisition affects profitability of commercial banks in Kenya, to determine the
relationship between competitiveness mergers and acquisitions and profitability of
commercial banks in Kenya and to investigate the effect of expertise on profitability of
mergers of commercial banks in Kenya. The study adopted a descriptive research design
and the population of interest will comprised of all the 24 banks that merged or were
acquired in Kenya during the study period of 2000 to 2010. The study used both primary
and secondary sources of data from published and audited annual reports of accounts for
the population of interest, C.B.K., N.S.E., C.M.A., and bank supervision annual reports
from C.B.K. Primary data was obtained from the merged commercial banks through
questionnaires. The data was analyzed using SPSS and computation of financial ratios
from the financial statements like the balance sheet, cash flows, and profit and loss
accounts and hence the interpretation of the study model. The results of the analysis were
presented in tables, percentages, graphs and charts. Multiple regression analysis between
variables was also done which showed that the variables under study were significant in
explaining the relationship between the mergers and acquisitions on the profitability of
commercial banks. the study recommends that institutions having weak capital base
consolidate to create synergies so as to enjoy economies of scale as this will improve
their profitability instead of going public by listing on the Nairobi Stock Exchange as this
may be an expensive venture listing and that those firms facing constraints on the market
should consolidate their energies by resorting to merger/acquisition so as to expand their
performance not just for the best interest of the managers but also shareholders as it leads
to an increase in shareholders’ wealth as opposed to each financial institution operating
separately on its own. | en |
