A Comparative Study on Mergers and Acquisitions in the Banking Sector- Case of ICICI Bank and Yes Bank
DOI:
https://doi.org/10.58213/vidhyayana.v8i5.690Keywords:
Mergers and Acquisitions, Banking, Financial Performance, Financial Ratios, Expansion, GrowthAbstract
Business transactions known as mergers and acquisitions (M&A) occur when ownership of a company, another business organisation, or one of its operating divisions is transferred to or combined with another company or business organisation. As a tool for strategic management, M&A enables companies to expand or contract as well as alter the nature of their industry or competitive position (RF Bruner, JR Perella – 2004). It is a well-liked business strategy for consolidating and restructuring corporations in order to increase market share, long-term profitability, penetrate new markets, take advantage of economies of scale, and other objectives.
The 1991 reforms led to a large rise in the number of private banks entering the Indian banking sector. By extending into new areas, the banks tried to maintain their expansion, which considerably boosted competition in the banking sector. In order to defend themselves, banks have started to take market share away from their competitors. This signalled the beginning of the merger era in the banking sector.
Hence, using important performance metrics including capital adequacy, asset quality, managerial efficiency, profitability, and earnings, this study investigates the extent of mergers in the Indian banking sector. The T-test was used to assess the significance of the ratio changes between the merger and prior. Using data from the relevant banks' official websites, two banks—ICICI bank (merge with bank of Rajasthan) and Yes bank—were selected as the study's sample. The results of the analysis show that ICICI Bank's financial performance has greatly improved since the merger. It has been decided that the combination has given them evidence of growth and expansion. In order to help banks realise synergistic gains in terms of equality and financial outcomes, the study also analyses policy implications for the reform of the Indian banking system.
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