An Exploration of the Impact of Mergers and Acquisitions in the Nigerian Banking Sector: A Study of Access Bank and Diamond Bank
DOI:
https://doi.org/10.47672/ijbs.1337Keywords:
Deposit banks, mergers and acquisitions, financial performance, corporate restructuringAbstract
Purpose: The purpose of this study was to evaluate the impact of mergers and acquisitions on the financial performance of companies.
Methodology: Two Nigerian deposit money banks, Access Bank and Diamond Bank were considered as case study to evaluate if they could perform better as a result of corporate restructuring when using merger and acquisition as a technique. The banks were considered because they had more than one M & A transactions between 2005 and 2019. The study carefully considered financial parameters such as return on assets, return on equity to draw conclusion. Quantitative research methodology was used as predestined by the purpose of this research. Secondary data in the form of published accounts were reviewed for the analysis. Descriptive statistics was employed for the data analysis, and the independent sample test was performed to assess the study's hypothesis. Additionally, the association between the transactions and the performance of the business was examined using Pearson's correlation coefficient.
Findings: The study found that merger and acquisition may increase a company's profitability but does not necessarily translate into increase in shareholder value. Businesses must manage the acquired assets and debts efficiently to increase shareholding value. With regard to the effect of mergers and acquisitions on the financial performance of deposit money banks, this study supplements the empirical data already available on specific financial indicators that improve post mergers and acquisitions performance.
Recommendation: It is recommended that the acquired asset profile needs to be effectively utilized so that the return on assets and returns on equity is improved after the merger.
Downloads
References
Access-Bank. (2022). Bank Annual Reports (2005-2021). . Retrieved from https://investorrelations.accessbankplc.com/pages/Investor-Relations/financial-reports/Annual-Reports.aspx.
Adesina, O. D. (2017). COMPARATIVE PERFORMANCE EVALUATION OF DEPOSIT MONEY BANKS IN NIGERIA (FINANCIAL RATIO ANALYSIS APPROACH). Researchgate, Retrieved from: https://www.researchgate.net/publication/344693176_COMPARATIVE_PERFORMANCE_EVALUATION_OF_DEPOSIT_MONEY_BANKS_IN_NIGERIA_FINANCIAL_RATIO_ANALYSIS_APPROACH.
Al-Hroot, Y. (2017). An Empirical Analysis of Pre and Post Merger Impact on Financial Performance: A Case Study of Jordan Ahli Bank. Journal of Accounting, Finance and Auditing Studies, Vol 9(3); 215-22.
Amu, C., & Chigbu, E. (2015). Relationship Between Pre and Post-Merger and Acquisition Banking Industry Performance in Nigeria. Independent Journal of Management & Production; Sao Paulo, 6(3), 850-865.
Appiah, F. K. (2019). The Effect of Mergers and Acquistions on Banks Financial Performance in the Ghanaian Banking Industry (A Case Study of Fbnbank Ghana Limited and International Commercial Bank. University Of Ghan, Dissertation Report.
Bhattacharya, M., & Biswas, S. (2021). Mergers & Acquisitions and Value Creation: A Banking Industry Perspective. IUP Journal of Accounting Research & Audit Practices; Hyderabad, 20(4), 32-46.
Bisma, A., & Khursheed, A. (2019). Impact of Mergers and Acquisitions on the Corporate Performance in FMCG Sector of India. “i-Manager's . Journal on Management, 14(2); 22-35.
Borodin, A. (2020). Impact of mergers and acquisitions on companies’ financial performance. . Journal of International Studies, Vol 13(2).
Bunmi, O. B., Bunmi, O. B., & Omotilewa, O. O. (2020). Merger and Acquisition and Perfomance of Deposit Money Banks in Nigeria: Pre and Post Analysis. researchgate, DOI:10.47752/sjbmm.312.183.191.
Chatterjee, S. (1992). Cultural Differences and Shareholder Value in Related Mergers: Linking Equity and Human Capital. Strategic Management Journal, 13(5), 319.
Chaudhary, G. (2016). Impact of Mergers & Acquisitions upon Banking Efficiency in Pakistan: A Data Envelopment Analysis Approach. Journal of Business Studies Quarterly, 8(1); 46-59.
Diamond-Bank. (2022). Annual Reports (2002-2008). Retrieved from: https://africanfinancials.com/document/ng-diamon-2003-ar-00/.
Etim, E. O., & Umoffong, N. J. (2020). Mergers and Acquisition Strategy and Performance of Selected Deposit Money Banks in Nigeria. Researchgate, https://www.researchgate.net/publication/346498748.
Godbole, A. (2013). Regulatory-induced consolidation through mergers and acquisitions and its implication on banks performance in Nigeria. International Journal of Business and Industrial Marketing, 1(1): 6-15.
Hitt, M. A., Harrison, J. S., & Ireland, R. D. (2001). Mergers and Acquisitions: A Guide to Creating Value for Stakeholders. Researchgate, Retreaved from: https://www.researchgate.net/publication/227466767_Mergers_and_Acquisitions_A_Guide_to_Creating_Value_for_Stakeholders.
Ikpefan, O., & Kazeem, B. (2013). The Effect of Merger on Deposit Money Banks Performance in the Nigerian Banking Industry. European Journal of Accounting Auditing and Finance Research, 2(1); 32-49.
Kumar, R. (2009). Post-merger corporate performance: an Indian perspective. Management Research, 32(2), 145-157.
Kwakye, V. (2019). Assessing the Effects of M&A’s on the Financial Performance of Ghanaian Banks. University of Ghana Business School, Legon.
Law, M. (2005). Reduce, Reuse, Recycle: Issues in the Secondary Use of Research Data. Vol. 29 No. 1;. DOI: https://doi.org/10.29173/iq599.
Malik, F. (2014). Mergers and acquisitions: A conceptual review. International Journal of Accounting and Financial Reporting, 4(2), 520-533.
Mihaiu, D. (2021). The Impact of Mergers and Acquisitions and Sustainability on Company Performance in the Pharmaceutical Sector. Researchgate, 13(2).
Nyantakyi, G., Nneka, U. O., & Wei, C. (2021). The impact of Mergers and Acquisitions on the Financial Performance of Ecobank Ghana Limited. Journal of Accounting, Finance and Auditing Studies, 7(3);243-259.
Okereke, N. (2004). Global trends in the role of capital market in economic development. . The Nigerian Stock Exchange Factbook.
Oloye, M., & Osuma, G. (2015). Impacts of Mergers and Acquisition on the Performance of Nigerian Banks (A case study of selected banks)”.
Pilloff, S. J. (1996). Performance Changes and Shareholder Wealth Creation Associated with Mergers of Publicly Traded Banking Institutions. Journal of Money, Credit and Banking, Vol 28(3), 294-310.
Sam, G. (2012). Research Methodology and Research Method. Retrieved from: https://www.researchgate.net/publication/333015026_Chapter_3_-_Research_Methodology_and_Research_Method. Accessed on 27th October, 2022.
Schendel, D. (1976). Corporate turnaround strategies: A study of profit decline and recovery. Journal of General Management, Vol 3, 3-11.
Shah, B., & Khan, N. (2017). Impacts of Mergers and Acquisitions on Acquirer Banks' Performance. “. Australasian Accounting Business & Finance Journal, 11(3). 30-54.
Soludo, C. (2006). Beyond banking sector consolidation in Nigeria. Presentation at the Global Banking Conference on Nigerian Banking Reform.
Umoh, N. (2004). "Capital restructuring of banks: A Conceptual Framework." In Central Bank of Nigeria. Fourth Annual Monetary Policy Conference, pp. 10-25.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Dr. Aitaa Sam Kilimvi, Mabel Oluwabusayo Ologesin
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work’s authorship and initial publication in this journal.
