Risk Management

Only available on StudyMode
  • Download(s) : 75
  • Published : January 31, 2013
Open Document
Text Preview
1. Comparative analysis of the impact of mergers and acquisitions on financial efficiency of banks in Nigeria In Nigerian, mergers and acquisitions in the banking sector decided to reform the tactics and change the position of banking sector. Okpanachi Joshua (2011) write this paper use many ratios such as gross earnings, profit after tax and net assets of the selected banks to compare the pre-mergers and acquisitions’ index number with the post-mergers and acquisitions’ index number during the fixed time. In this article, the author selected three Nigerian banks and adopted convenience and judgmental sample selection methods.Data were gathered from the published annual reports. Their analysis put into use t-statistics via statistical package for social sciences. And we will use Access Bank and first bank of Nigeria as illustration. Table1. Access Bank Plc extracted financial efficiency parameters (2002 to 2008). Period Pre mergers Base year Post mergers| Years| 2002| 2003| 2004| 2005| 2006| 2007| 2008|

Naira (Million)|
Gross earnings| 2,604,378| 4,367,887| 5,515,086| 7,494,855| 13,360,358| 27,881,451| 57,627,098| Profit after tax| (55,245)| 556,573| 637,473| 501,515| 737,149| 6,083,439| 16,056,464| Net assets| 1,943,784| 2,365,357| 2,702,830| 14,071,924| 28,893,886| 28,384,891| 171,002,026|

Table2. First Bank of Nigeria Plc extracted financial efficiency parameters (2002 to 2008). Period Pre mergers Base year Post mergers| Years| 2002| 2003| 2004| 2005| 2006| 2007| 2008|

Naira (Million)|
Gross earnings| 46,267| 50,597| 51,318| 49,475| 61,243| 79,299| 130,600| Profit after tax| 4,776| 11,010| 11,483| 12,184| 16,053| 18,355| 30,473| Net assets| 19,406| 27,006| 41,605| 48,726| 64,277| 83,627| 351,854|

According to the tables above, the result of mergers and acquisitions events is that the sample banks stated improved financial performance and that they give rise to more financial efficiency. In order to test the hypotheses mentioned before, this paper applied the t-test statistic. Treating critically the result of the t-test, there is just tiny distinction between the pre and post mergers and acquisitions periods when examine the gross earnings, profit after tax and net assets. But all of the gross earnings, profit after tax and net assets of the post mergers and acquisitions period have a better performance compared with the pre mergers and acquisitions. For this reason, the post-mergers and acquisitions’ period was more financially efficient than the pre-mergers and acquisitions period. At last, the paper suggests that the banks should be more enterprising in the area of financial position. Only in this way, the banks can fortify financial efficiency and obtain the benefit of post mergers and acquisitions bid. 2. Mergers and Acquisitions: A Pre-Post Analysis for the Indian Financial Services Sector PankajSinha and Sushant Gupta annualized the mergers and acquisitions project of the Indian Financial Services Sector in this paper. And it also includes the bank sector. All the samples have been tested individually and generally to decide the influence of mergers and acquisitions in the industry. The followed table shows the frequency plot for various parameters.

And the authors also examined the pre-merger and post-merger model. PRE MERGER MODEL
Explanatory Variables| Coefficient| t-statistic| p-value| Constant| -0.182358| -0.048757| 0.9613|
Interest coverage| 0.156388| 1.893913| 0.0427*|
Current Ratio| -0.025916| -0.274015| 0.785|
Cost Efficiency| -2.137706| -0.232981| 0.8165|

So we can see that the interest coverage is an important variable quantity that affects the return on shareholders. And also it is absolutely associated to the increase of interest coverage that regard to grow of return earned on shareholders. POST MERGER MODEL...
tracking img