Mergers and Acquisitions, Risk Management, Institutional Characteristics and Financial Performance of Commercial Banks in Kenya
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Date
2023Author
Gachigo, Justin I.
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Commercial banks operate in a volatile operational and legal environment that is
fraught with competition. Commercial bank regulators have established stringent
requirements to protect depositors in the event of a bank failure. Commercial banks are
looking for ways to ensure compliance while improving overall performance
considering the demanding and competitive operating and legal environments. The
research examined the relationship among mergers and acquisitions, risk management,
institutional characteristics, and financial performance of commercial banks in Kenya.
The specific objectives were to determine the effect of mergers and acquisitions on the
financial performance of commercial banks in Kenya, the determination of moderating
role of institutional characteristics on the relationship between mergers and acquisitions
and financial performance commercial bank, and to determine the mediating role of risk
management on the interaction among mergers and acquisitions and financial
performance of commercial bank. Synergies theory, resource-based view theory,
agency theory, and concentration theory were used to anchor the study. A correlational
descriptive research design with cross-sectional data analysis and positivism paradigm
was used to accomplish the project's goals. The thirty Kenyan commercial banks that
had undergone mergers and acquisitions by 2017 formed the population of the study.
The data was gathered from publicly available financial statements, which were split
into two; three years before and three years after mergers and acquisitions, with the
transaction year been excluded. To determine the mathematical connection among the
variables in the study, multiple regressions analysis was used. The results of the study
showed that mergers and acquisitions had a significant positive effect the on the
financial performance of commercial banks in Kenya. The study also found that the
connection between mergers and acquisitions and commercial bank financial
performance is moderated by institutional characteristics. The study's findings also
revealed that risk management failed to mediate the connection between mergers and
acquisitions and commercial bank financial performance. Finally, the combined impact
of mergers and acquisitions, risk management, and institutional characteristics on
commercial bank financial performance was found to be significant. The findings of the
research provide answers to the inconsistencies found in the prior reviewed studies by
empirically testing the study variables thus contributing to knowledge by providing new
insights based on the variables studied. The research findings contribute to theory by
revealing the relationship among the supporting theories. Synergies theory results to
increased value of the firm, where agency theory highlights possible misuse of free cash
flows and guides on solutions to avoid the agency problem, while resource-based view
supports mergers and acquisitions as a means of mopping excess cash flow by
combining homogeneous resources for competitiveness. The research findings further
contribute to the policy and practice in the sense that the insights will help decision making
processes geared toward targeted outcome. The study results are limited to
elements of the study and hence a recommendation of similar study using other
attributes in varied context and scope.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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