Analysis of the pre-post-merger and acquisition financial performance of selected banks in Nepal

Abstract

Mergers and Acquisitions (M&A) have become an effective strategic tool to consolidate the Banks and Financial Institutions (BFIs) in Nepal to increase their capital base, expand their business, and bring financial stability. This paper evaluates the impact of M&A on the financial performance of two commercial banks between 2013 and 2020 by using twelve accounting ratios and a paired sample t-test. The findings for the first bank show that the impact of the merger on the financial performance ratios is mixed, despite significant improvements in return on assets, net interest margin, and earnings per share. However, in the case of the second bank, there is an insignificant impact of M&A on the financial ratios except for dividends per share (DPS) in the pre-post-M&A period.