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Pre & Post-Merger Financial Performance: An Indian Perspective

Author

Listed:
  • Ritesh Patel

    (Department of Management, Nirma University, Ahmedabad, Gujarat, India)

Abstract

The paper compares the before and after merger position of long term profitability with respect to selected Indian banks for a period of 2003-04 to 2013-2014. The financial performance is evaluated on the basis of various variables. The study found a negative impact of merger on return on equity, return on assets, Net profit ratio, yield on advance and yield on investment. However, variables, namely, the Earnings per Share, Profit per employee and Business per employee have shown positive trend and grown after the merger. It has been observed that after the merger, the Assets, Equity, Investment and advances of all banks increases, but due to underutilization, their respective yield decreases. On a contrary, the business per employee and profit per employee have increased due to optimum utilization of human resources. By applying the Comparative Analysis, the paper also assesses the financial performance of acquiring bank with the banking industry. The Bank of Baroda and Oriental bank of commerce has found decreases in Yield on Advances and yield on investment as compared to average of all banks in the post-merger period. State bank of India & IDBI Bank has higher business per employee and profit per employee as compared to industry average.

Suggested Citation

  • Ritesh Patel, 2018. "Pre & Post-Merger Financial Performance: An Indian Perspective," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 7(3), pages 181-200.
    • Handle: RePEc:cbk:journl:v:7:y:2018:i:3:p:181-200
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    File URL: http://www.cbcg.me/repec/cbk/journl/vol7no3-10.pdf
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    Citations

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    Cited by:

    1. Thakur-Wernz, Pooja & Bruyaka, Olga & Contractor, Farok, 2022. "Sourcing portfolio diversity in new product development: Antecedents and performance implications," Journal of Business Research, Elsevier, vol. 150(C), pages 179-193.
    2. Abdulateif A. Almulhim & Abdullah A. Aljughaiman & Abdulaziz S. Al Naim & Abdulmohsen K. Alosaimi, 2024. "Effects of Risk Committee on Agency Costs and Financial Performance," JRFM, MDPI, vol. 17(8), pages 1-19, August.
    3. Diana Marieta Mihaiu & Radu-Alexandru Șerban & Alin Opreana & Mihai Țichindelean & Vasile Brătian & Liliana Barbu, 2021. "The Impact of Mergers and Acquisitions and Sustainability on Company Performance in the Pharmaceutical Sector," Sustainability, MDPI, vol. 13(12), pages 1-24, June.
    4. Isha Gupta & T. V. Raman & Naliniprava Tripathy, 2023. "Impact of Merger and Acquisition on Financial Performance: Evidence from Construction and Real Estate Industry of India," FIIB Business Review, , vol. 12(1), pages 74-84, March.

    More about this item

    Keywords

    Merger; Financial performance; Bank; India.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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