Merger and Acquisition of Indian Banks and Their Impact on Its Financial Performance and Shareholders Wealth

Abstract

Mergers and acquisitions (M&A) have grown in popularity as a technique of increasing company value for shareholders. The Indian banking industry employs various strategies to improve market capitalization, expand its client base, and create value for shareholders. These include risk management, consolidation, sharing of competitiveness, economies of scale, and synergies. By implementing these approaches, banks can effectively service a large geographic area and share knowledge, ultimately leading to enhanced market performance. This report investigates the impact of an announcement or merger on stock returns and its subsequent effect on shareholder wealth. The motives underlying M&A activity in India, especially among Indian organizations and corporations, are examined in this dissertation. However, it has been emphasized how important it is to examine the acquiring firms' shareholder value and financial performance both before and after the merger. To guarantee consistency and an accurate outcome, the survey has been limited to only include Indian businesses. In addition, the study is concentrated on the Indian Banking Sector. The influence of bank mergers and acquisitions on financial outcomes in India is examined in the paper that follows. Two distinct views have been used to analyze how acquiring banks affect performance. Operational performance, profitability, and elements impacting shareholder value are three major topics connected to purchasing banks that are covered in this research. These elements will be the focus of the investigation in order to provide readers a thorough grasp of the situation with regard to purchasing banks today. In this article, three instances of M&A in the Indian banking sector industry are studied. Purpose of the research is to look over the hypothesis of whether or not M&A affects the acquiring banks' financial performance and shareholder value. Numerous financial performance metrics and shareholders value characteristics have been employed to test the theories.