Impact Of Merger On Financial And Operating Performance Of Public Sector And Private Sector Banks

Abstract

Banks play a crucial role in the global economy, and their continuous development newlineand assessment are essential to address the challenges and inefficiencies they face. newlineEvaluating the profitability and financial performance of banks is vital in navigating newlinethese difficulties. Over the past decade, the banking industry has seen an upwelling in newlinemergers and acquisitions among large financial institutions, reflecting a trend towards newlinerestructuring to ensure better growth prospects. This study considers the impact of newlinemergers on the financial and operating performance of public and private sector banks newlinefrom 2010-11 to 2022-23. It analyses the pre-merger and post-merger performance of newlinenationalized public sector banks and private sector banks, including State Bank of newlineIndia, Canara Bank, Bank of Baroda, Union Bank of India, Punjab National Bank, newlineIndian Bank, Kotak Mahindra Bank, ICICI Bank, and IDFC First Bank. The primary newlineobjective is to evaluate the significance of mergers using various financial ratios such newlineas return on capital employed, net profit margin, operating profit margin, return on newlineequity, and earnings per share. The Secondary objectives deals with the study assesses newlinethe efficiency of merged banks through the CAMELS model. To determine if there is newlinea significant difference in the pre-merger and post-merger performance of the newlineacquiring banks, a Paired t-test is applied to the CAMELS performance evaluation newlineparameters at a 95% confidence level. An Independent-samples t-test is also used to newlinecompare the post-merger performance of public and private sector acquiring banks on newlinethe CAMELS parameters. The research further examines with the help of third newlineobjective the perceptions of stakeholders, including employees and account holders, newlinetowards bank mergers, capturing their insights on the consolidation process. Various newlinequestionnaires were developed separately for employees and account holders, with newlinetools such as the Chi-square test, One-way ANOVA, Paired sample t-test, and newlineIndependent-samples t-test employed to analyze the d