An exploration of the impact of mergers and acquisitions in the Nigerian banking sector: A study of access bank and Diamond Bank

Abstract

Purpose: The purpose of this study was to evaluate the impact of mergers and acquisitions on the financial performance of companies.

Methodology: Two Nigerian deposit money banks, Access Bank and Diamond Bank were considered as case study to evaluate if they could perform better as a result of corporate restructuring when using merger and acquisition as a technique. The banks were considered because they had more than one M & A transactions between 2005 and 2019. The study carefully considered financial parameters such as return on assets, return on equity to draw conclusion. Quantitative research methodology was used as predestined by the purpose of this research. Secondary data in the form of published accounts were reviewed for the analysis. Descriptive statistics was employed for the data analysis, and the independent sample test was performed to assess the study's hypothesis. Additionally, the association between the transactions and the performance of the business was examined using Pearson's correlation coefficient.

Findings: The study found that merger and acquisition may increase a company's profitability but does not necessarily translate into increase in shareholder value. Businesses must manage the acquired assets and debts efficiently to increase shareholding value. With regard to the effect of mergers and acquisitions on the financial performance of deposit money banks, this study supplements the empirical data already available on specific financial indicators that improve post mergers and acquisitions performance.

Recommendation: It is recommended that the acquired asset profile needs to be effectively utilized so that the return on assets and returns on equity is improved after the merger.