FINANCIAL PERFORMANCE OF BANKS IN PAKISTAN AFTER MERGER AND ACQUISITION

Abstract

Purpose The aim of this research is to identify the impact of merger and acquisition on a bank’s profitability and to find out that whether that merger and acquisition was a good decision or not and its impact on shareholders wealth. The main objective of this research is to know that what which ratios were positive for banks in its pre and post merger period. In today’s global market where competition is high, organizations have many choices to move forward at the current pace or to make some strategic decision to become the leader in their respective sector. Financial ratios like Liquidity, Profitability, Investment and Solvency are the key predictor of banks performance. In order to make a strategy successful it must be forecasted by organization that what resources they have and what decisions they need to make to make that strategy successful. Methodology Research is cause & effect explanatory study. By reviewing the literature of previous researchers a theoretical framework is designed and then secondary data was collected from financial statements of banks and Pakistan Stock Exchange. After collecting the data results are calculated using financial ratios. Data is collected from sample of 4 Banks. Financial Ratios is used to analyze the relationship between merger and acquisition and banks profitability. Findings The results suggest that positive relation exist between merger and acquisition and banks profitability. This study reveals that merger and acquisition is very helpful for a company to increase its financial performance if that strategy is well structured and properly implemented. Practical Implications The results of this research will help corporate bodies, investors, shareholders, bankers, insurance companies, government and individuals about the possible effect of merger and acquisition on banks profitability.