Pre merger versus post merger performance evaluation of public sector banks vis a vis privte sector banks in India that have merged during the period 1993 1994 to 2004 2005

Abstract

The banking sector plays an all-encompassing role of a catalyst towards the socio-economic development of a country. The Indian banking sector is referred to as the backbone of the Indian economy and occupies an important and pivotal place in a developing country like India. newlineOver the past decade, the banking industry has experienced an unprecedented level of consolidation as mergers and acquisitions among large financial institutions have taken place at record levels. Merger and acquisition is one amongst the various modes of restructuring resorted by banks to ensure better growth prospects. newlineAlthough there is adequate research literature on banking mergers and acquisitions, most of the studies have been done for the proficient markets of the developed world particularly US and UK. In India, very inadequate research has been done in the area of banking mergers and acquisitions. Very few studies conducted in India have explored the performance of banking mergers and acquisitions empirically in terms of their pre-merger versus post-merger performance using the CAMEL s Framework. newlineIt is therefore important to understand and study the impact of mergers and acquisitions on the performance of the acquiring Indian banks during the pre-merger versus post-merger period, as well as to study the impact of mergers and acquisitions on the post-merger performance of acquiring public sector banks vis-à-vis acquiring private sector bank with reference to bank mergers in India. newlineUnder this backdrop the present study attempts to fill these voids and proposes to analyze whether mergers and acquisitions have contributed towards the enhancement of performance of Indian banks. The primary objective of this research is to evaluate the impact of mergers and newlineacquisitions on the performance of the acquiring Indian banks during the pre-merger versus post-merger period by analyzing the variables explicated in the CAMEL model, with reference to bank mergers in India during the period 1993-94 to 2004-2005 and to study the impact of mergers and a