Abstract
In Ghana, Mergers and Acquisition strategy has been used widely in the banking sector. It is a strategy adopted by the organizations globally to meet the needs of recent dynamic business environment. This paper empirically examines the impact of mergers and acquisitions on the operational cost efficiency of banks in Ghana with specific emphasis of two banks; Ecobank and Access Bank-Ghana. If any improvements in operating efficiency from these mergers are large relative to any adverse effects of price changes created by increases in market power, then such mergers may be in the public interest. The financial data was analyzed by the use of Ratio analysis. Models that are commonly employed by bankers and other financial institutions in Ghana to compute the overall operational efficiency was also used. In terms of operational cost efficiency, results were incoherent for the two banks which the researchers strongly attributed to some fundamental limitations. However, the study revealed that mergers and acquisitions could potentially offer financing option for banks as well as promote economic efficiency through improvements in costs.
Highlights
Banks contribute significantly to the efficiency of the money and capital markets of the economy through their intermediary role between the deficit and surplus units
The main objective of the study was to assess the extent to which mergers and acquisition have impacted on operational cost efficiency of selected banks in Ghana (Ecobank and Access Bank)
The objective of the study was to assess how M & A has impacted on operational cost efficiency of selected commercial banks in Ghana, following the 2008 bank recapitalization
Summary
Banks contribute significantly to the efficiency of the money and capital markets of the economy through their intermediary role between the deficit and surplus units. In the early 1990s, financial-sector liberalization in Ghana was initiated, under the Financial Sector Adjustment Program (FINSAP), as part of a comprehensive macroeconomic adjustment program. The objective was to free the financial system from excessive government regulation in order to foster a competitive market-based system. Initiatives such as the liberalization of allocative controls on banks, strengthening of prudential regulation and supervision, restructuring of distressed banks were instituted. Recent developments include the adoption of International Financial Reporting Standards (IFRS) in line with international standards by Bank of Ghana as a way of reducing systemic risk; the establishment of Collateral Registry and Credit Reference Bureaus that seeks to promote transparency and ease credit accessibility, and the setting up of the Financial Intelligence Centre (FIC) to address money laundering and counter financing for terrorism. The Ghanaian financial landscape witnessed significant transformation, with more banks coming into the system
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