Abstract
This research studies the effect of independent variables such as cost efficiency, ROA, ROE and Capital on dependent variable EPS of the merged bank in Nepal. Various statistical tools such as mean standard deviation, correlation, regression were employed to measure the effect of bank merger on the shareholders wealth. Based on the result of study, except ROA, no other independent variable under study showed any impact on earnings per share. The superior bank shareholders are not getting what they deserve and inferior bank shareholders get more than they deserve after the post-merger. It is also finding out that external factors such as earthquake, border blockade and political instability highly affects the shareholders earnings.
Highlights
Background of the Study: In 1937 AD, Nepal Bank Limited was established as the first commercial bank in the history of Nepalese banking industry
Coefficient of Determination (R2): The results presented above indicates that R2 value of 0.957 indicates that about 95.7% of the total systematic variations in the shareholders wealth were due to of the variations in capital base, return on assets (ROA), Return on Equity (ROE), and cost efficiency
With the increase in capital base EPS is increasing by 0.21.ROA has positive impact on earnings per share and ROE has negative impact
Summary
Background of the Study: In 1937 AD, Nepal Bank Limited was established as the first commercial bank in the history of Nepalese banking industry It was the jointly owned bank of the government and general public. Nepal’s financial market opened up for international investment in January 2010 and merger by-laws came in place in May 2011 (Adhikari, 2014). This scholar has closely observed that the merger transactions are increasing in Nepal over the past few years – almost only since year 2011- with an aim to create wealth for shareholders, developing efficient and reliable banking that can compete with new entrants from foreign. In recent Nepalese scenario mergers & acquisitions is playing an important role in shaping competent and advance banking in Nepal
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