RELATIONSHIP BETWEEN PRE AND POST MERGER AND
ACQUISITION BANKING INDUSTRY PERFORMANCE IN NIGERIA
Christian U. Amu
Federal University of Technology, Nigeria
E-mail: chrisuamu@yahoo.com
Ezeji Emmanuel Chigbu
Federal University of Technology, Nigeria
E-mail: sussychigbu@yahoo.com
Submission: 23/03/2015
Accept: 07/04/2015
ABSTRACT
The objective of this paper is to analyze the
relationship between the pre and post-merger and acquisition performance of
banking industry in Nigeria. Aggregate banking data ranging from 1981 to 2013
were analyzed for evidence of correlation between the pre-merger banking
performance and post-merger banking performance in Nigeria. The results
obtained from the descriptive analysis of the pre and post-merger and
acquisition periods shows that the banking industry performance is
significantly better after the merger than before the merger. Furthermore, the
Pearson correlation coefficients show that absence of relationship between the
pre and post-merger period. Overall, the results show that there is significant difference in the
performance of Nigerian banking industry in the pre-merger and post-merger and
acquisition periods.
Keywords: Merger & Acquisition, Bank performance, Nigeria.
1.
INTRODUCTION
The
relevance of banks in the economy of any nation cannot be over emphasized. They
are the cornerstones of the economy of a country. The economies of all
market-oriented nations depend on the efficient operation of complex and
delicately balance system of money and credit. Banks are an indispensable
element in these systems. They provide the bulk of the money supply as well as
the primary means of facilitating the flow of credit. Consequently, it is
submitted that the economic wellbeing of a nation is a function of advancement
and development of her banking industry (OBADAN, 1997).
Banks
play a crucial role in propelling the entire economy of any nation, of which
there is need to reposition it for efficient financial performance through a
reform process geared towards forestalling bank distress. In Nigeria, the
reform process of the banking sector is part and parcel of the government
strategic agenda aimed at repositioning and integrating the Nigerian banking
sector into the African regional and global financial system.
To
make the Nigerian Banking sector sound according to Ajayi
(2005), the sector has undergone remarkable changes over the years in terms of
the number of institutions, structure of ownership, as well as depth and
breadth of operations. These changes have been influenced mostly by the
challenges posed by deregulation of the financial sector, operations,
globalization, technological innovations and implementation of supervisory and
prudential requirements that conforms to international regulations and
standards..
Nigeria
banking reform is a product of the global efforts at revamping the world
economy. First it was the millennium development goal (MDG), next it was new
partnership for Africa Development (NEPAD) Strategy before the National
Economic Empowerment and Development Strategy (NEEDS). All these have been
things in common: The Economic Development in Nigeria for a long time ranging
from the history of policy reforms and developing the banking sector was given
priority attention. Various directives were given to the banking sector with
the aim of indirectly developing other sectors by propelling the entire
economy.
Similarly,
a strong and virile economy depends to a very large extent on a robust, stable
and reliable financial system including the banking sector. This explains the
frequency with which the Nigerian banking sector has witnessed repeated reforms
aimed at fine-tuning it to meet up the economic challenges so as to achieve
stability and developmental goals which are not only limited to domestic
savings mobilization and financial intermediation, but also the elimination of
inefficiency to enhance financial efficiency. The financial efficiency
parameters are determined and measured by gross earnings, profit after tax, net
assets as well as total equity.
Nigeria
banking sector has experienced a boom and burst in its cycle in the past 20 to
25 years. After the implementation of the structural adjustment program (SAP)
in 1986 and de-regulation of the financial sector, new banks proliferated
mainly driven by attractive arbitrage opportunities in the foreign exchange
market (BELLO 2007), but prior to the deregulation period, financial
intermediation never took off and even declined in the1980’s and 1990’s. The
sector was highly oligopolistic with remarkable features of market
concentration and leadership.
Lemo (1997) noted that there were about ten banks that
control more than 50% of the aggregate assets of the banking sector, more than
51% of the aggregate deposits liabilities and more than 45% of the aggregate credits.
As at then, the banking sector was characterized by small scale banks with high
overheads; low capital base averaging less than ($10 million) ten million
Dollars; heavy reliance on the government patronage and loss making. Nigeria‘s
banking sector was still characterized by a high degree of fragmentation and
low level of financial intermediation up to 2004.
Soludo (2004) opines that the Central Bank of Nigeria (CBN)
choose to begin the Nigerian banking sector reform process with the
consolidation and recapitalization policy through mergers and acquisitions.
This is done in order to arrest systems decay, restoration of public
confidence, building of strong, competent and competitive players in the global
arena, ensuring longevity and higher returns to investors.
Considering
the inability of most Nigerian banks to perform well due to operational
hardship, expansion bottlenecks as a result of heavy fixed and operating costs
coupled with volatility between deposits and lending rates. Charles Soludo the governor of CBN on July, 6, 2004, increase the
capital base of banks to (N25 billion) twenty five billion naira from (N2
billion) two billion, with the objective of creating a sound and more secure
banking system that depositors can trust through recapitalization and
consolidation program which enhances operational capital base. These and many
more, act as a spring board to achieving improved efficiency.
The
wave of bank consolidation that recently swept through the banking sector
started after the announcement by the CBN on behalf of the federal government
of Nigeria, that banks in Nigeria should beef up their minimum capital base to
(N25 billion) twenty five billion naira on or before 31st December, 2005. As
the termination date for banks consolidation workout drew nearer, desperate
efforts were made by the banks to meet the minimum capital fixed by the CBN
before the expiration date.
There
were many options available towards solving the challenge of recapitalization.
A bank could among other options merge with others or acquire smaller ones or
volunteer to be acquired by others or do it alone or by combination of two or
more of the options. Nevertheless, the strategies adopted by majority of these
banks were merger and acquisition. These merger and acquisition brought about a
fusion of the 89 banks in the country into mega banks units of only 25 as at 31st
December 2005 and later a total of 21 banks presently.
According
to CBN report, 25 banks emerged at the end of the first consolidation exercise
from the previous 89 banks, while 14 banks were liquidated. The second
consolidation exercise left a total of 20 banks in operation with savannah bank
regaining its license making it a total of 21 banks presently operating in
Nigeria. (UMOREN, 2007)
According
to the value increasing school, merger occur broadly because it generate
‘synergies’ between the acquirer and the target, and synergies in turn
increases the value of the firm. The theory of efficiency suggests that merger
will only occur when they are expected to generate enough realizable synergies
to make the deal beneficial to both parties; it is the symmetric expectations
of gains which results in a ‘friendly’ merger being proposed and accepted. If
the gain in value to the target was not positive, it is suggested, the target
firm’s owners would not sell or submit to the acquisition, and if the gains
were negative to the bidders’ owners, the bidder would not complete the deal.
Mergers
and acquisitions are a global phenomenon, with an estimated 4,000 deals taking
place every year. However, they are not a recent development; five periods of
high merger activity, also known as merger waves, occurred in the United States
in 1897-1904, 1916-29, 1965-69, 1984-89 and 1993-2000 (ILO, 2001; JIMMY, 2008;
MANGOLD; LIPPOK, 2008).
While
merger and acquisition started in Nigeria in 2004/2005 with effect from January
1, 2006 under the governorship of Professor Charles Chukwuma
Soludo at the Central Bank of Nigeria (CBN). On one
month assumption of office/duties, Charles Soludo
worked out details of an agenda for repositioning the CBN and the financial
system for the 21st century with an outcome of pruning the Nigerian
eighty nine (89) Banks that was in existence as at 2004.
Merger
and acquisition or any other form of consolidation may influence bank interest
rates, competition and transmission mechanism of monetary policy, increase in
size and the opportunity for reorganization. It also enhances profit and
efficiency that bears marginal costs or gives rise to increase in market power,
or both together.
The
recent merger and acquisition in the Nigeria banking industry are attracting
much attention partly because of the height in revenue generation as well as
its competitive advantage. One often held the view of merger and acquisition,
especially those involving banks, is that firms are merging just to get bigger.
Accompanying this notion is the fear that merging firms grab greater market
share, individual freedom and competition are threatened, because bigger is perceived
as greater concentration of power. While merger and acquisition have certainly
reduce the number of banks nationwide, concentration of power in local banking
market have not increased. And the very force of regulatory changes that
spurred banks merger and acquisition is also bringing new sources of
competition to local banking markets (IKPEFAN;
KAZEEM, 2013).
Umoren (2007), posits that merger and acquisition is simply
another way of saying survival of the fittest, that is to say a bigger, more
efficient, better capitalized and more skilled industry survive why the weaker
one’s die. It is primarily driven by business continues and or market forces
and regulatory interventions. This issues therefore, which this study intend to
address are whether mergers and acquisition will bring about efficient,
reliable and sound capital base for the banks that fully embraced merger and/or
acquisition and to what extent can bank merger or acquisition boost the
confidence of the customers, the investors, the shareholders and ability to
finance the real sector of the Economy.
This
research work is motivated by the need to look into the Central bank’s recent
reform (consolidation and recapitalization policy through merger and
acquisition) that employed certain measures to strengthen the Nigeria banking
industry by drastically increasing the minimum capital requirement from (N2
billion) two billion naira to (N25 billion) twenty five billion naira.
Through
review of relevant literatures, analysis of policy documents, official report
and economic information on the banking sector, it became evident that the
consolidation of banks led to a remarkable reduction in the number of banks
from 89 to 25 (as at 31st December 2005) and finally 21 (at present)
by merger, acquisition, recapitalization, and other means. Moreover since
merger and acquisition cannot be over emphasized, this prompted the
researchers’ interest to access the perceived impact of merger and acquisition
on banks in Nigeria.
This
research work will critically evaluate merger and acquisition on Nigeria banks
and see if it has resulted in making banks in Nigeria more efficient and
reliable and also, if their intermediary potentials have also been revised.
Moreover it will access three selected Nigeria banks that underwent merger and
acquisition to see if their profitability which is a function of performance
has enhanced their stability and consequently the capacity to compete in the
global market as well as reshaping the banking industry.
Banks
are recently seeing consolidation and recapitalization program through merger
and acquisition as an alternative means of re-capitalizing, surviving the
global financial meltdown as well as competing favorably in the global arena.
The latest reform that compelled all commercial banks to raise their capital
base from (N2 billion) two billion naira to (N25 billion) twenty five billion
naira on or before 31st December 2005 so as to consolidate the
existing banks into fewer, larger and financially stronger and efficient banks
sent some of the banks on their heels-considering merger and acquisition since
it was one of the best options available to them (SHEPHERD, 2010). Accompanying
this notion is a fear that the few market leaders in the industry will grab
greater market share hence competition will be threatened since bigger is
perceived to have greater concentration of power.
The
Nigeria banking system today is fragile and marginal. Our vision is a banking
system that is part of the global change, which is strong, efficient, competitive
and reliable. It is a banking system which depositors can trust and investors
can rely upon. Persistent illiquidity, weak corporate governance, poor assets
quality, insider abuse, weak capital base, unprofitable operations and over
dependence on public sector funds necessitated the banking sector reform (NNANNA,
2005). Moreover, in recent times, many banks appear to have abandoned their
essential intermediation role of mobilizing savings and inculcating banking
habit at the household and micro enterprise level (SOLUDO, 2004).
The
main objective of this study is to examine the relationship between the
pre-merger and post-merger performance of banking industry in Nigeria. This
paper therefore contributes to existing literature on merger and acquisition
and banking industry performance in Nigeria. The findings are also useful to monetary authority and
aid in formulation of banking system capitalization policies. The
remainder of the paper is organized as follows. Section 2 presents the
empirical literature. Section 3 embodies methodology and data. Section 4 presents the empirical results and
discussions, and section 5 concludes
the paper.
2.
EMPIRICAL
LITERATURE
Mergers
entails the coming together of two or more firms to become one big firm while
acquisition is the takeover or purchase of a small firm by a bigger firm, which
are both pursuing similar motives. Imala (2005)
postulated that the objectives of banking system are to ensure price stability
and facilitate rapid economic development.
Regrettably
these objectives remained largely unattained in Nigeria as a result of some
deficiencies in our banking system, these include; low capital base, as average
capital base of Nigeria banks was N10 million which was very low, a large
number of small banks with relatively few branches, the dominance of a few
banks, poor rating of a number of banks, weak corporate governance evidence by
inaccurate reporting and non-compliance with regulatory requirements,
insolvency as evidence by negative capital adequacy ratios of some banks,
eroded shareholders fund caused by operating losses, over dependence on public
sector deposit, and foreign exchange trading and the neglect of small and
medium scale private savers. The Nigeria banking sector plays a marginal role
in the development of the real sector.
Accordingly,
Soludo (2004) opines that mergers and acquisitions
are aimed at achieving cost efficiency through economics of scale, and to
diversify and expand on the range of business activities for improved
performance.
There
are different study of mergers and acquisitions. Several researchers have given
different perspectives of mergers and acquisitions. These mergers and
acquisitions paradigms include: economic and finance; strategy; organizational
behavior and human resource management perspectives (BALMER; DINNIE, 1999;
CARTWRIGHT; COOPER, 1992; MILLWARD; KYRIAKIDOU, 2004).
The
economic and finance paradigm is primarily interested in the efficiency impact
of mergers and acquisitions on the economy through economies of scale and
market power with emphasis on market for corporate control. One of the key
arguments of the market for corporate control paradigm is that economic value
created through acquisition activities is decided by market characteristics
including its competitiveness (BALMER; DINNIE, 1999).
Researchers
using the strategy paradigm see mergers and acquisitions as a means of
corporate growth and diversification, primarily, emphasizing factors that are
management controlled such as diversification strategies as a crucial factor in
determining post-acquisition performance (MARKS; MIRVIN, 2001).
The
primary interests in human resource management perspective are the
psychological effects of mergers and acquisitions on individuals such as
feelings of tension, alienation and uncertainty.
Moreover,
numerous researchers have empirically examined whether mergers and acquisitions
are solutions to bank problems (see for example: SZAPERY, 2001; BELLO, 2005;
AKINTOYE, 2008; SOMOYE, 2008). Szapery (2001) for
instance provides the foundation for a research on the linkage between bank
mergers and acquisitions and profitability.
Evidence
provided by Kama (2006) suggests that mergers and acquisitions in the financial
system could impact positively on the efficiency of most banks. Surprisingly,
the available empirical evidence suggests that mergers and acquisitions
operations in the United States banking industry have not had a positive
influence on performance in terms of efficiency.
Many
researchers have attempted to examine the effect of mergers and acquisitions on
the efficiency of the banking industry. For instance, Tripe (2000) analyzed a
small sample of seven to fourteen banks, employed accounting ratios and two
Data Envelopment Analysis (DEA) models to explore the efficiency of six banks
mergers in New Zealand between 1989 and 1998.
They
found that the acquiring banks to be generally larger than their existing ones,
although they were not consistently more efficient. They found that five or six
merged banks had efficiency gains based on the financial ratios while another
only achieved a slight improvement in operating expenses to average total
income. Based on DEA analysis, they found that only some merged banks were more
efficient than the target banks pre-merger. The results suggest that four banks
had obvious efficiency gains post-merger.
Gourlay (2006) examined the efficiency gains from mergers
among Indian Banks over the period 1991-1992 to 2004-2005 and observed that the
mergers led to improvement of efficiency for the merging banks.
Also,
evidence supporting mergers and acquisitions to achieve cost saving and
efficiency gain is sparse (KWAN; EISENBEIS, 1999). Akvein,
Berger and Humphrey (1997) analyze changes in profitability experienced in the
same set of large mergers. They found that banking organizations significantly
improved their profit efficiency ranking after mergers.
De
Young (1997) finds out that when both the acquirer and target were poor
performers, mergers resulted in improving their performance. Healy, Palepu and Ruback (1992) examine all commercial banks and bank holding
company mergers and acquisitions occurring between 1982 and 1986. They found
that mergers and acquisitions did not reduce non-interest expenses that could
have led to improved efficiency.
According
to Pilloff and Santomero
(1997), there is little empirical evidence of mergers achieving growth or other
important performance gains. Their finding undermines a major rationale for
mergers and consequently raised doubt about other benefits mergers and
acquisitions may provide to businesses.
However,
Kay (1993) finds some evidence of superior post-merger period because of the
merged firms’ enhanced ability to attract loans. They also show increased
employee productivity and net asset growth. Also, this is evident in the
Nigeria’s banking industry (OKPANACHI, 2007).
Walter
and Uche (2005) posit that mergers and acquisitions
made Nigerian banks more efficient. They used table to present their data which
was analyzed using simple percentage. Akpan (2007)
using chi-square to test his stated hypothesis found that the policy of
consolidation and recapitalization has ensured customer’s confidence in the
Nigerian banking industry in terms of high profit. But for Sobowale
(2004) and Osho (2004), it is expected that the value
of the companies that participated in mergers and acquisitions activities would
be higher than before because future dividends and earning streams are expected
to rise and subsequently improves efficiency.
Similarly,
Uchendu (2005) and Kama (2007) opine that, the bank
consolidation which took place in Malaysia facilitated banks expansion which
led to growth in their banking sector. In a related study of the Chilean
banking industry, Kwan (2007) finds that the experience in Chile was mainly
from productivity’s improvement from the large banks formed as a result of
mergers and acquisitions.
Surprisingly,
the majority of studies comparing pre and post mergers performance found that,
this potential efficiency derived from mergers and acquisitions rarely
materialize (AKVEIN et al., 1997). Towards this end, Beital,
Schiereck and Wahrenbur
(2003) finds no gain effect due to mergers and acquisitions, but for Kama
(2007), mergers and acquisitions played an important role in improving banking
performance after merger and financial performance which is a stimulus for
efficiency.
Ikpefan and Kazeem
(2013) examines the impacts of merger on deposit money banks performance in
Nigeria between 2000 and 2009 using panel data ordinary least squares approach
is the methodology. The results shows that merger created synergy as indicated
by the statistically significant increasing post-merger financial performances
although banks should not jump at any merging opportunity that offers itself
because the exercise is not an opportunistic one. They therefore recommend that
merger being a relatively new phenomenon in the Nigerian banking environment
should be given more encouragement by the regulatory authorities.
3.
METHODOLOGY AND
DATA
3.1. Methodology
To investigate relationship between
pre and post-merger and acquisition banking sector performance in Nigeria, we
adopt descriptive analysis and correlation analysis. Descriptive analysis is
the presentation of summary of the important statistics in a data set. Our descriptive statistics involve plotting of time
series graph and computation of mean, standard deviation, skewness, kurtosis,
and Jarque-Bera statistic for the level and first
difference of the pre and post-merger and acquisition series of private sector
deposit and banking sector net assets, which serve as the proxy for banking
industry performance in Nigeria. While the mean presents information on the
average banking industry performance, the standard deviation shows the level of
variation of the series from their average. The skewness and the kurtosis
provide insight into their distributional pattern.
The correlation analysis, on the
other hand, was conducted using Pearson product moment correlation method. The Pearson correlation coefficient is a measure of
the strength relationship between two variables X and Y. It is computed by
dividing sample covariance by the product of standard deviations of X and Y
thus:
Where, is the Pearson product moment correlation or
the sample correlation coefficient, is the sample variance, is the sample standard deviation of X and is the sample standard deviation of Y. The X and Y here
represent pre and post-merger and acquisition performance of the banking
industry in Nigeria.
The correlation coefficient measures
the strength of linear dependence between the pre and post-merger and
acquisition performance of the banking industry in Nigeria. The two random
variables are uncorrelated if = 0. The closer
the correlation coefficient to 1, the more the two variables is correlated
3.2. Description of
Data
The
data for this study was generated from secondary sources. The data consist of
the annual private sector deposit (PSD) with the commercial banks and banking
sector net assets (BSNA); the PSD and BSNA serve as the proxy for banking
industry performance. The data were obtained the Central Bank of Nigeria
Statistical Bulletin 2013 The period under consideration begins from 1981 and
ends on 2013.
4.
Empirical Results
Figure
1, 2 and 3 below display Time Series
graphical summary of the relationship between pre and post-merger and
acquisition Private Sector Deposit and Banking Sector Net Assets. The pre-merger
period is the period before 2004 and the post-merger period is from 2006. From the time series graph displayed on Figure 1 to 3, we visualize that
the series do not behave alike.
This suggests that the pre and post-merger
and acquisition periods in the Nigerian banking history may not be the same.
But the graphs do not indicate whether the banking industry perform well in the
pre-merger period or in the post-merger period. Another noticeable behavior of
the series is the lack of clarity on the nature of stationary of the series in
both periods.
Figure 1:
Time series plot of depositors’ confidence and banking sector net assets 1981
to 2013
Figure 2: Time series plot of pre-merger private sector deposit
and banking net assets 1981 to 2004
Table 1 displays the descriptive
statistics for the banking sector in the pre-merger and acquisition period and post-merger
and acquisition period in Nigeria. We observe, from Table 1, that the average pre-merger
banking sector deposit was N145.8 billion but increased to N3.4
trillion in the post-merger and acquisition period. This represents 2245%
increase in the banking sector deposit in the post-merger period.
Also, the standard deviation of the post-merger
private sector deposit also increased by 633% over its value in the pre-merger
period. In the same vein, the banking sector net assets increased from N481
billion in the pre-merger period to N9.8 trillion in the post-merger and
acquisition period; representing 1944%
change in banking sector assets. Another noticeable feature of Table 1 is the
distribution of the banking industry performance in the pre and post-merger and
acquisition periods. The two series (PSD and BSNA) appear to be normally
distributed in pre-merger period but not normally distributed before merger,
except for kurtosis, which show evidence of normal distribution.
Table 1:
Descriptive Statistics of Banking Sector Performance
|
Mean |
Std.
Dev. |
Kurtosis |
Skewness
|
Jarque-Bera |
|
PSD Level Series |
||||||
Pre-Merger |
145.80 |
211.55 |
1.657* |
1.646 |
13.592 |
|
Post-Merger |
3419.06 |
1552.29 |
-1.145* |
-0.443* |
0.787* |
|
PSD Change Series |
||||||
Pre-Merger |
0.253 |
0.140 |
1.411 |
1.170 |
13.592 (0.001) |
|
Post-Merger |
0.211 |
0.218 |
-1.998 |
0.056 |
0.787 (0.674) |
|
BSNA Level Series |
||||||
Pre-Merger |
481.39 |
666.06 |
1.672* |
1.632 |
13.460 |
|
Post-Merger |
9842.42 |
4761.56 |
-1.359* |
-0.275* |
0.806* |
|
BSNA Change Series |
||||||
Pre-Merger |
0.226 |
0.082 |
1.599 |
1.149 |
13.460 (0.001) |
|
Post-Merger |
0.214 |
0.158 |
-1.363 |
0.390 |
0.806 (0.668) |
|
Note: PSD is private sector deposit; BSNA is the
banking sector net assets. * indicates significant at 1% level and (.)
indicates p-value.
In Table 2, we present results of
the paired two samples for means using t-test. This was used to examine the
mean for the pre and post-merger and acquisition private sector deposit as well
as the mean for the pre and post-merger periods for the banking sector net
assets series. Notice from Table two that the hypothesized mean difference of
zero (0) in these two cases are not true.
This leads to rejection of the null
hypotheses of zero mean difference for the pre and post-merger period for the
PSD and BSNA. This rejection is not surprising given that the banking industry
private sector deposit increased in the post-merger period by 2245% from its
value in the pre-merger period. Similarly, the banking sector net asset also
increased by 1944% in the post-merger period from N481 billion before the
merger. This result therefore supports the notion that merger and acquisition
is a catalyst for the development of banking industry in Nigeria.
Table 2:
t-Test: Paired Two Sample for Means
|
Pre and Post PSD |
Pre and Post BSNA |
Hypothesized Mean Difference |
0 |
0 |
Df |
7 |
7 |
t Stat |
0.402792 |
0.194339 |
P(T<=t) one-tail |
0.349559 |
0.425715 |
t Critical one-tail |
1.894579 |
1.894579 |
P(T<=t) two-tail |
0.699119 |
0.85143 |
t Critical two-tail |
2.364624 |
2.364624 |
Table
3 below presents the Pearson correlation coefficients for the pre and post-merger
and acquisition for the private sector deposit as well as for the banking
sector net asset. Notice from the table that the pre-merger and post-merger performances
of the private sector deposits are negative but not linearly related. On the
other hand, the pre-merger and post-merger performances of the banking sector
net assets are positive but not linearly related. Generally, these results show
that significant difference in the Nigerian banking industry performance in the
pre-merger and post-merger periods.
Table 3:
Pearson Correlation Coefficients
|
Pre and Post PSD |
Pre and Post BSNA |
Pearson Correlation |
-0.28708 |
0.119858 |
5.
Conclusions
The
objective of this paper is to analyze the performance of the Nigerian banking
industry before the 2004/2005 merger and acquisition and after the merger and
acquisition periods using descriptive statistics and correlation analysis for
the 1981 to 2013 sample period.
The
descriptive analysis of the pre and post-merger and acquisition periods shows
that the banking industry performance is significantly better after the merger
than before the merger. This is evident in the significant increase in the
private sector deposit and banking sector net assets. It further shows that the
post-merger banking performance is normally distributed.
The
coefficients of the Pearson correlation conducted to show the relationship
between the pre and post-merger periods, did show any relationship between the
pre and post-merger periods. Overall,
the results show that there is significant difference in the
performance of Nigerian banking industry in the pre-merger and post-merger and
acquisition periods.
REFERENCES
AJAYI,
M. (2005) Banking Sector Reforms and Bank Consolidation in Nigeria, Bullion
CBN Publication, v. 29, n. 2, p. 4-5.
AKINTOYE,
R. (2008) Activity in the Nigerian Banking Industry: Some Clarifying Comments, International
Research Journal of Finance & Economics, n. 19, p. 65.
BALMER,
J.; DINNIE, K. (1999) The Antidote to Merger Madness, Corporate Identity & Corporate
Communications, v. 4, n. 4, p. 182-187.
BELLO,
Y. A. (2005) Banking Sector Reforms and Bank Consolidation in Nigeria, Bullion
CBN Publication, v. 29, n. 2, p. 48.
CARTWRIGHT,
S.; COOPER, C. (1992) Managing Mergers and Strategic Alliances: Integrating People and Cultures,
Oxford, Elsevier, p. 6.
IKPEFAN, O. A.; KAZEEM, B. L. O. (2013) The Effect
of Merger on Deposit Money Banks Performance in the Nigerian Banking Industry, Journal of Applied Finance
& Banking, v. 3, n. 4, p. 105-123.
IMALA
.O. A. (2005) Challenges of Banking Sector Reforms & Bank Consolidation in
Nigeria, Bullion, v. 29, n. 2, p. 27.
KAMA, U. (2006) Recent
Reforms in the Nigerian Banking Industry: Issues and Challenges, Bullion. A Publication of CBN Pp
50-53.
NNANNA,
O. J. (2005) Beyond Bank Consolidation:
The Impact on Society’, A Paper Presented at the Annual CBN Fourth Monetary
Policy Conference held in Abuja, 18th - 19th November.
SHERPHERD,
A. (2010) Mergers and Acquisitions in the Nigerian Banking Industry: An
Advocate of three Mega Banks, European Journal of Social Sciences,
v. 15, n. 4, p. 555
SOLUDO,
C. (2004) Consolidating the Nigerian
Banking Industry to Meet the Development Challenges of the 21st Century,
Being an address delivered to the Special Meeting of the Bankers Committee,
held on July 6, at the CBN Headquarter, Abuja.
SOMOYE,
R. O. C. (2008) The Performance of Commercial Banks in Post Consolidation
Period in Nigeria: An empirical review, European Journal of Economics, Finance
and Administrative Science, n. 14, p. 63-64.
UMOREN,
A. O. (2007) Merger and Acquisitions in Nigerian: Analysis of performance in
Pre and Post Consolidation Era, Journal of Banking & Finance and
Economics, p. 151-153.