Effects of Mergers and Acquisitions (M&A) on the Profitability of Indian Banking Sector

DOI

10.2991/978-94-6463-544-7_24How to use a DOI?

Keywords

Financial Performance; Profitability; Mergers and Acquisitions (M&A); Efficiency; Synergy

Abstract

The significance of Mergers and Acquisitions (M&A) within the India’s banking landscape surged following the proposals of the Narasimham Committee. However, the implementation of these recommendations became prominent with the series of SBI mergers with its associates and other consolidations. A key motivation behind these mergers is the reduction of Non-Performing Assets (NPAs), creating competitive with international recognition and more specifically to improve financial health of banks. Therefore, the aspiration of the present study is to examine the dynamics of the Indian banking industry by assessing the profitability of banks following M&A. The dataset used for present study covers the years immediately following the global financial crisis (GFC) of 2007–2008 to 2023. Most appropriate variables have been filtered through literature and employed for executing the investigation, and these are Return on Assets, Return on Equity, Operating Profit Margin, Cost of Funds, Return on Advances, and Return on Investment. The data for each variable has been collected for the period of 6 years (i.e., 3 years preceding and following the M&A). Statistical parametric tests such as Kolmogorov-Smirnov (K-S) test, P-S t-test have been used to measure and compare the bank’s profitability. In conclusion, this research demonstrate that M&A enhanced the financial metrics of Indian banks. This research contributes significantly to the theory of “Efficiency and Synergy”. In practical terms, the study offers substantial contribution to academicians, banking professionals, investors, regulatory bodies, financial analysts, and society.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Arshi Ali
AU  - Vaishali
PY  - 2024
DA  - 2024/10/17
TI  - Effects of Mergers and Acquisitions (M&A) on the Profitability of Indian Banking Sector
BT  - Proceedings of the 2nd International Conference on Emerging Technologies and Sustainable Business Practices-2024 (ICETSBP 2024)
PB  - Atlantis Press
SP  - 363
EP  - 376
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-544-7_24
DO  - 10.2991/978-94-6463-544-7_24
ID  - Ali2024
ER  -