Do Merger and Acquisition Affects Acquirer Bank’s Performance? A Comparative Analysis of Pre and Post Performance

Ullah, Nazim and Mat Nor, Fauzias and Abu Seman, Junaidah and Uddin, Akther (2018): Do Merger and Acquisition Affects Acquirer Bank’s Performance? A Comparative Analysis of Pre and Post Performance.

Abstract

Merger and Acquisition is a strategy adopted by the organizations globally to meet the needs of the dynamic business environment, especially in the banking sector. The aim of the study is to investigate and explain the factors of merger and acquisition on the acquirer bank’s performance. Several factors associated with M&A namely synergy, size, mode of financing, economics areas, regional effect and bank-specific variables are examined and discussed. Ordinary Least Squire (OLS) method is applied on Unbalanced panel data of 47 acquirer banks year from 2008 to 2016. The findings imply that pre-M&A bank’s performance is better than post-M&A bank’s performance. Bank size does not significantly impact on the post-merger bank’s performance. Further, the efficiency ratio is also more sensitive to the performance meaning that it reduces the post-merger bank’s performance if the cost to income is higher. While the post-merger bank’s performance is not affected by liquidity ratio as their asset size is larger than before the merger. Lastly, dummies for regional, i.e. ASEAN and MENA acquirer banks have negative effect but not significant on the performance which could be due to its poor governance. However further research is needed to study the impact of the corporate governance standard of a country of the acquirer banks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers & Acquisitions, Factors, Acquirer bank’s performance, and OLS.
• Subjects: G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance

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