Impact of Merger and Acquisitions on Banks Financial Performance

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IMPACT OF MERGER AND ACQUISITION ON BANKS FINANCIAL PERFORMANCE

BY
HIRA KHAN
STUDENT OF MBA-I
IN JINNAH UNIVERSITY FOR WOMEN
DEPARTMENT OF BUSINESS ADMINSTRATION

THIS RESEARCH PAPER SUBMITTED TO
THE FACULTY OF
JINNAH UNIVERSITY FOR WOMEN AND TO
MRS, AMBREEN FAIZAN
IN PARTIAL REQUIREMENT FOR THE DEGREE OF
MBA
FOR THE COURSE OF
ADVACE RESEARCH METHOD
15TH JUNE, 2012
AC(C)K(K)N(N)O(O)W(W)L(L)E(E)D(D)G(G)E(E)M(M)E(E)N(N)T(T)

I thank Allah for guiding me through the phases of compiling this research paper and helping me out in all the difficulties. I would like to take this opportunity to thank MRS, AMBREEN FAIZAN my teacher for the course of “ADVANCE RESEARCH METHOD” at JINNAH UNIVERSITY FOR WOMEN, for her valuable support and encouragement, which she has offered. This research paper is a whole effort of HIRA KHAN and I could not have been made possible without the immense help and cooperation of my family members. Without their support and the amount of time that they gave us, this research paper would not have existed.

Thanks a lot.

ABSTRACT:
The Pakistan banking industry is one of the most prosperous and flouring industry in Pakistan. Despite the political and economic turbulence that strikes this country, this industry remains solid and prosperous. In past few decades a wave of merger and acquisition has been arisen in the developing countries. Pakistan is no difference in this case. Looking at the data of listed companies on Karachi stock exchange (KSE), it is obvious that in 2001 and onwards the M&A have got momentum. The Pakistan banking industry witnessing a growing trend of mergers and acquisition. The present paper examines the objective of the research to identify the extent of impact of merger and acquisition on banks financial performance. Quantitative research is adopted by this study. The sources of data for the study are secondary sources obtains from the banks audited annual reports, financial statements, balance sheet, income statement, cash flow statement and Karachi stock exchange (KSE) website where the provide past years analysis report of banks. The liquidity, profitability and market stock value measures were compared for three year pre-merger (2004-2006) and (2007-2009) post-merger from the financial statements of the sample bank. I take the NIB bank and PICIC commercial bank as a sample bank in order to calculate its financial performance after the merger. The methods of analysis used for the study were paired sample or observation t-test.the results show that the financial performance of NIB bank limited in the areas of liquidity management, profitability and market stock value has been quite satisfactory before the merger deal. It means that merger deal fails to improve the financial performance of the bank.

TABLE OF CONTENT:
1 INTRODUCTION--------------------------------------------------------------------------------------------------1 1.1 PROBLEM STATEMENT-----------------------------------------------------------------------------------------1 1.2 RESEARCH QUESTION--------------------------------------------------------------------------------------------1 1.3 SIGNIFICANCE OF THE STUDY----------------------------------------------------------------------------------1 1.4 OBJECTIVES OF THE STUDY-------------------------------------------------------------------------------------2 1.5 LIMITATION/DE-LIMITATION-----------------------------------------------------------------------------------2 1.6 SCOPE OF THE STUDY--------------------------------------------------------------------------------------------2 2 LITERATURE REVIEW--------------------------------------------------------------------------------------------3-5 3 METHDOLOGY-------------------------------------------------------------------------------------------------------6 SAMPLE BANK TABLE...
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