Post-merger Periods Research Articles

Does the Merger of the Indonesian Islamic Bank Matter for Its Social Mission of Economic Empowerment?

Research Originality: Economic empowerment through financing Micro Small Medium Enterprises (MSMEs) is one dimension of the social mission of sharia banking in Indonesia. The merger action of Bank of Sharia Indonesia (BSI) raises the question of whetherthe performance of economic empowerment has changed.Research Objectives: This research aims to analyse the differences in the BSI’s performance of economic empowerment during preand post-merger periods and analyse the issues and strategies for improving BSI's post-merger economic empowerment performance.Research Methods: It is a research using mixed method combining a quantitative explorative analysis approach using Wilcoxon Test, and a qualitative one using Analytic Network Process.Empirical Results: This research finds that BSI's economic empowerment performance has increased in terms of the quantity but decreased in terms of proportion in the post-merger period. ANP research demonstrates that risk management is a priority issue for the BSI post-merger period. The social mission of economic empowerment indicates several priority issues, namely, the relatively higher rate of profit margin than interest, the inadequate supervision model, the low rate of risk management literacy, and the relatively higher risk of profit loss sharing (PLS)-based financing. The strategy analysis indicates that policy intervention for BSI’s MSMEs financing is a top priority in improving the performance of its economic empowerment.Implications: This research recommends some recommendations for sharia banks’ MSMEs financing equivalent to the one of conventional banks. Economic digitalization as technological means to widen accessibility of economic empowerment and distribution segmentation focusing more on the halal sector.JEL Classification: A13, G21, G34How to Cite:Isman, A. F., & Hidayah, N. (2024). Does the Merger of the Indonesian Islamic Bank Matter for Its Social Mission of Economic Empowerment? Etikonomi, 23(2), 333 – 352. https://doi.org/10.15408/etk.v23i2.39810.

A Comparative Study On Financial Performance Of Sbi In The Pre And Post Merger Periods Using Camels Rating Model

The core objective of the study aims to compare the performance of State Bank of India through CAMELS model during the pre and post merger periods with five of its associates. The study period covers 2012 to 2022. Data from secondary sources were used in this study. The comparison is made on the basis of the parameters like capital adequacy, asset quality, management quality, earning quality, liquidity and sensitivity to market risk. Data is analysed by using Paired sample t-test and also CAMELS ratings in the present study. The outcomes of the study reveals that SBI’s financial competency is improving post merger periods. But attention is required in liquidity quality in terms of total loans to total deposits (L1). Liquidity quality in terms of circulating assets to total assets (L2) and sensitivity to market are excellent in CAMELS ranking. Out of six parameters in CAMELS, management quality and liquidity quality in terms of total loans to total deposits (L1) are found to be significant in the post merger period. The study concluded that post-merger SBI's earnings quality is improved but liquidity did not. So management should be meticulous with managing liquid assets.

Effectiveness of Consolidation of Bank of Baroda: An Empirical Study

Consolidation through Merger & Acquisition is not a new phenomenon in the Indian banking space. After the adoption of the Basel-III norms by the RBI in 2013, the process of consolidation became more relevant and imperative in the Indian banking sector. Under such situations, study on effectiveness of the ongoing consolidation drive has become necessary. With this end in view, the paper attempt to highlight the effectiveness of Merger & Acquisition on the profitability of Bank of Baroda. The study is based on the secondary data collected from various sources for the period 2015-16 to 2022-23. ROE of Bank of Baroda is measured by using extended Dupont analysis. Furthermore, paired t test have been applied to determine whether there exists any significant difference among the drivers of ROE during the pre and post-merger period of Bank of Baroda. The Extended Dupont analysis revealed that though there was an increase in ROE during the post-merger period; Asset Turnover and Tax Burden were found to be lower than that of pre-merger period. Paired t-test pointed out that there was no significant difference in ROE during the pre-and post-merger periods. Additionally, among the five drivers of ROE, only operating margin was found to have a significant difference during the pre-and post-merger periods. The present study will help to provide an insight into the profitability of the merger of India’s third largest public sector banks in India.

Pre and Post–Merger Financial Performance Analysis of Commercial Banks in Nepal

Purpose: This study attempts to examine the effect of merger on the financial performance of Nepalese commercial banks.
 Methodology: This paper employs a descriptive and causal comparative research design to examine the financial performance of commercial banks involved in six merger deals as of mid-July 2022, with a sample of four merger deals completed before mid-July 2018. Mean, standard deviation, paired sample t-test, Pearson correlation, regression analysis, and the VIF test, are utilized for data analysis. Financial performance is evaluated using nine key ratios (EPS, NWPS, P/E ratio, CD ratio, CAR, NPL ratio, ROA, ROE, and NPM). Secondary data covering six years (2010 to 2019), excluding the specific merging year, are analyzed.
 Findings: The analysis of pre- and post-merger financial performance in the sample commercial banks revealed statistically significant differences in EPS, NWPS, ROA, and NPM. Positive correlations were observed between the pre- and post-merger periods for EPS, NWPS, CD ratio, CAR, NPL ratio, ROA, ROE, and NPM, excluding the P/E ratio. The merger proved beneficial for Nepalese commercial banks, leading to improved profitability in terms of EPS, ROA, and NPM in the post-merger phase. However, factors like CD ratio, CAR, and NPL ratio, regulated by the NRB, showed no significant changes post-merger. Although banks experienced increased P/E ratio and ROE, the impact was deemed insignificant. Notably, CAR had the most significant impact on both pre- and post-merger ROA.
 Implication: The results derived from the study are relevant to managers for future merger decisions and can be used for the selection of a suitable partner for future merger activities.
 Value: It contributes to a better understanding of the overall merger scenario in Nepalese banking sector, as well as the relationship between certain restrictions and merger.

Measuring the Performance of Islamic Banking in Indonesia with Maqashid Sharia Index: Pre-Merger and Post-Merger Period

This study examines the performance of Islamic Commercial Banks in Indonesia in the pre and post-merger periods based on the combination of the Maqashid Syariah Index of Ibnu Ashur and Abu Zahrah. With three main indicators, namely tahdzib al fard (individual education), iqamah al adl ( justice), and maslahah (welfare). A comparative quantitative method using simple additive weighting (SAW) to measure the weight and performance rating of Islamic banking was used in this study. The results of the study indicated that the Islamic performance of Islamic Commercial Banks in Indonesia was below average. However, the merger has a positive impact on improving the performance of Islamic Commercial Banks in Indonesia in the post-merger period.
 Keywords: Islamic performance, Maqashid Sharia Index, merger

Intellectual Capital Efficiency and Performance of Banks in India

The aim of this paper is to examine the impact of intellectual capital efficiency on the performance of commercial banks in India for twotime periods, viz. 2018-19 and 2020-21 representing the pre and post-merger periods. The IC efficiency (ICE) of the banks is measuredusing the standard Human Capital Efficiency (HCE), Structural Capital Efficiency (SCE). The performance is measured in terms ofReturn on Assets (ROA), Return on Equity (ROE), Net Interest Margin (NIM), and Return on Investments (ROI). The results show thatsub-components of IC have impacted the performance of banks variedly, but not consistently. The ICE of private sector banks hasincreased over the period of study. The impact of merger on the ICE performance of the individual public sector banks has been mixed,though on the average, there is no immediate statistically significant impact of the mergers on the ICE performance of all the public sectorbanks in India.Key words: Intellectual Capital Performance, Human Capital, Banking, Productivity, Profitability, Mergers

Corporate Mergers, Acquisitions and Value Creation of Firms in Nigeria

This study seeks to scrutinize the effect of corporate mergers, acquisition and value creation of firms in Nigeria and to identify areas of synergy. The study employed secondary data collected from the bank’s annual report. The data collected covered a period of fourteen years, which is divided into the pre and post-merger periods of seven years respectively. The study adopted panel least square estimation technique and other estimation for the analysis. The study finds out that shareholders’ funds and earnings per share are significant in determining the return on asset. Also shareholders’ funds and total asset values are statistically significant in the pre-merger periods in determining return on asset. That profit after tax is statistically significant in explaining financial efficiency in the pre-merger periods; the study concludes that there was increase in the shareholders’ funds for the post-merger periods.

Quality and Safety Outcomes of a Hospital Merger Following a Full Integration at a Safety Net Hospital

Hospital consolidations have been shown not to improve quality on average. To assess a full-integration approach to hospital mergers based on quality metrics in a safety net hospital acquired by an urban academic health system. This quality improvement study analyzed outcomes for all nonpsychiatric, nonrehabilitation, non-newborn patients discharged between September 1, 2010, and August 31, 2019, at a US safety net hospital that was acquired by an urban academic health system in January 2016. Interrupted time series and statistical process control analyses were used to assess the main outcomes and measures. Data sources included the hospital's electronic health record, Centers for Medicare & Medicaid Services Hospital Compare, and nursing quality reports. A full-integration approach to the merger that included: (1) early administrative and clinical leadership integration with the academic health system; (2) rapid transition to the academic health system electronic health record; (3) local ownership of quality metrics; (4) system-level goals with real-time actionable analytics through combined dashboards; and (5) implementation of value-based and other analytic-driven interventions. The primary outcome was in-hospital mortality. Secondary outcomes included 30-day readmission, patient experience, and hospital-acquired conditions. The 122 348 patients in the premerger (September 2010 through August 2016) and the 58 904 patients in the postmerger (September 2016 through August 2019) periods had a mean (SD) age of 55.5 (22.0) years; the total sample of 181 252 patients included 112 191 women (61.9%), the payor mix was majority governmental (144 375 patients [79.7%]), and most admissions were emergent (121 469 patients [67.0%]). There was a 0.71% (95% CI, 0.57%-0.86%) absolute (27% relative) reduction in the crude mortality rate and 0.95% (95% CI, 0.83%-1.12%) absolute (33% relative) in the adjusted rate by the end of the 3-year intervention period. There was no significant improvement in readmission rates after accounting for baseline trends. There were fewer central line infections per 1000 catheter days, fewer catheter-associated urinary tract infections per 1000 discharges, and a higher likelihood of patients recommending the hospital or ranking it 9 or 10. In this quality improvement study, a hospital merger with a full-integration approach to consolidation was found to be associated with improvement in quality outcomes.

A STUDY OF NON-PERFORMING ASSETS OF ICICI BANK: PRE-MERGER AND POST-MERGER ANALYSIS

The purpose of this paper is to examine the impact of mergers and acquisitions (M&A) of Industrial Credit & Investment Corporation of India (ICICI Bank) and Bank of Rajasthan on non-performing assets (NPAs) of Industrial Credit & Investment Corporation of India (ICICI Bank). The analysis consists of two stages. The methodology adopted in the study is based on descriptive research wherein secondary data was collected from the official websites of ICICI bank. By using MS Excel 2016 software, the data was analysed by using the ratio analysis approach, to determine the variation in the current position and secondly, the change in the efficiency of the banks during the pre-merger and post-merger periods by using descriptive statistics in the context of non-performing assets. KEYWORDS: Non-performing Assets, Merger Acquisition, Pre-merger and Post-merger, CAGR (Compounded Annual Growth Rate), Earning per share.

Merger and Acquisition and Perfomance of Deposit Money Banks in Nigeria: Pre and Post Analysis

Low capital base, insolvency, poor corporate governance and incessant banks distress among other factors have contributed to the recent failure of banks in Nigeria. To curb such challenges, banks all over the world now adopt mergers and acquisitions as a strategy to improve their performances. Therefore, this study examined the impact of mergers and acquisition on the performance of deposit money banks in Nigeria. The study considered capital structure, asset profile, total deposit and profit after tax of the selected bank as the measurement for the performance and effect of merger and acquisition of the bank in both pre and post merger and acquisition period. Data were collected from the published financial statements of the bank namely former Intercontinental Bank Plc and Access Bank (now Access Bank Plc) from 2005 to 2017 and the model was formulated using ordinary least square method. It was revealed that for both the pre-merger and post-merger periods, it was revealed that the access bank performed better. In the post – merger and acquisition period as asset profile and total deposit has no significant effect on the profit after tax of access bank in Nigeria, while capital structure has a significant effect on profit after tax of access bank plc. While in the pre-merger and acquisition capital structure, asset profile and total deposit have no significant impact on profit after tax of access bank plc. The study concludes that mergers and acquisitions have a significant impact on the performance of deposit money bank in Nigeria. Therefore, the study recommended that banks can merge or acquire one and other. This has proved to be an effective strategy for rescuing ailing or weak banks. This would provide financial muscles and managerial competence that would enhance financial performance.

MERGERS AND ACQUISITIONS IN THE NIGERIAN BANKING INDUSTRY: AN ANALYSIS OF SELECTED PERFORMANCE MEASURES

Business combination through mergers and acquisitions has become a global phenomenon to achieve economies of scale and higher productivity. This study evaluated the impact of mergers and acquisitions which started in 2005 on the performance of deposit money banks in Nigeria using a sample of ten (10) banks. This research made use of secondary data, obtained from the bank’s annual reports and statements of accounts covering a period of 1999-2018. Using four (4) variables; earning per share (EPS), net profit margin (NPM), assets utilization (AUT), and leverage (LEV), the study evaluated the performance of the banks before and after mergers and acquisitions using pair sample t-test. The results showed that there is significant difference in the performances of Deposit Money Banks in the pre and post-merger periods using the EPS and NPM yardstick but shows no significant impacts in the performances of Deposit Money Bank using AUT and LEV as yardstick. The study hereby recommends that the CBN should set and enforce better corporate governance standards for commercial banks and also enforce risk based supervision in banks.

Regulatory reform and market efficiency: The case of Indian agricultural commodity futures markets

We present the results of two efficiency measures that include intraday return predictability measure based on order imbalance and measures of several variance ratio tests on intraday subsamples of nine major Indian agricultural commodity futures (castor seed, cotton oil cake, rape mustard seed, soybean, refined soya oil, crude palm oil, jeera, chana, and turmeric) quoted in the National Commodity and Derivatives Exchange (NCDEX). We perform the efficiency measures on five subsamples with holding periods of 5, 10, 15, 30, and 60 min over two sample periods following the announcement of the merger between the Forward Market Commission (FMC) and Securities Exchange Board of India (SEBI). We compare results of tests of weak-form market efficiency of futures markets between two periods (pre-merger period and post-merger period). Our results confirm that Indian agricultural commodity futures markets continue to remain inefficient in the short-term during both pre-merger and post-merger periods. Based on these findings, it is likely that profitable trading strategies in the short intraday intervals will be available for traders and market participants during post-merger period. Thus, regulators must focus more on policy initiative so as to enhance market quality in order to address such inefficiencies in Indian commodity futures markets.

Mergers, Acquisitions and Financial Performance: A Study of Selected Financial Institutions

The aim of the study is to examine the impact of mergers and acquisition on financial performance in the Nigerian financial system. The study examined selected financial institutions in the banking sector. Specifically, some financial indicators such as asset profile, credit risk, capital structure, liquidity, size and cost control ratios, were extracted from the audited financial reports of the selected banks for the period 2000-2010 to compare the performance of the selected financial institutions in the ex-ante period and compare these performance with the ex post period of their mergers and acquisitions. Longitudinal and time series analyses were employed to observe the performance of the selected banks. Results from the analysis suggest that credit risks showed a better post merger performance, but were statistically insignificant and negatively related with the performance of the selected financial institution pre-merger. Asset profile was found to be significant and positively related with post-merger in relation to the performance of the selected financial institutions, but it was insignificant and negatively related to the financial performance of the selected firms pre-merger. Capital structure of the selected firms was found to be significant and positively related to the performance of the firms’ pre-merger, but insignificant and negatively related to the performance of the firms post-merger. Liquidity of the firms indicated a significant and positive relationship with the performance of the banks pre-merger. However, post merger result indicates that, there was no significant and positive relationship between the liquidity of the firms and financial performance post-merger. The size of the selected banks indicated a significant relationship with their performance in both the pre-merger and post-merger periods. The cost control variable indicated a statistically significant and negative relationship with the performance of the banks post-merger period, but showed no significant relationship with performance of the banks in the pre-merger period. Finally, the results indicate that mergers and acquisitions can have significant impact on the performance of the selected financial institutions in Nigeria.

Effect of Mergers and Acquisitions on Performance of Enterprise Value

In this study, we have made an analysis on the impact of Mergers and Acquisitions (M and A) on the performance of Enterprise Value in the post-merger period. For this purpose, ten firms were selected based on the adequacy of data for a period of ten years on a year-to-year basis from 2006-2007 to 2016-2017. The firms, which had gone into the M and A process during the financial year 2011–2012 are also considered for the study. Paired samples t-test is applied to study the mean difference in performance of Enterprise Value of the acquiring firms in the pre-and post-merger periods. From the analysis, it has been found that the acquiring firms drastically improved in stock price and business performance. As a result the acquiring firms are visible among competitors with a capacity to develop into something big in the future and merged firms feel that they have chosen a good acquirer firm. Hence, most of the acquiring firms have significant change in the performance of Enterprise Value in the post-merger period.

How mergers affect innovation: Theory and evidence

This article analyses how horizontal mergers affect innovation of the merged entity and its non-merging competitors. Using data on horizontal mergers among pharmaceutical firms in Europe and applying propensity score matching estimators, we find that average patenting and R&D of the merged entity and its rivals declines substantially in post-merger periods. We show that this result is consistent with the predictions from an oligopoly model with heterogeneous firms, as well as a patent race model, when pre-merger R&D intensity is sufficiently high. Consistent with our theoretical model, we find that negative effects of mergers on innovation are concentrated in markets with high R&D intensity and in technology classes with overlap in pre-merger innovation activities of merging and rival firms.

Organizational learning, operating costs and airline consolidation policy in the Chinese airline industry

This study investigated and reviewed organizational learning in the Chinese airline industry, which is dominated by state-owned or state-controlled airlines. This empirical research focused on the extensive scale of airline mergers and acquisitions among 12 Chinese airlines for the period of 1996–2014. This research aims to make a contribution towards addressing the general lack of academic reflection on the impact of organizational learning on airline performance during and after the completion of mergers and acquisitions. The empirical findings of this paper suggested that there was, in general, organizational learning experienced by Chinese airlines from their prior operating experience in improving operating costs. However, airline mergers in 2001/02 increased airlines' average operating costs, as most state-owned airlines are notorious for poor cost management. Significantly, the performance improvement among Chinese airlines was found during the post-merger periods in this study, and the increase in Chinese airlines’ operating costs during the post-acquisition periods due to the limited integration of 2010 acquisition compared with the 2001/02 mergers.

Forced Mergers on Bank Efficiency and Productivity: Evidence from Semi-parametric Malmquist Productivity Index

The paper examines the impact of mergers and acquisitions on the productivity of the Malaysian banking sector. The analysis consists of two stages. Firstly, the semi-parametric Malmquist productivity index (MPI) method is applied to a [-5, +8] window to examine the efficiency and productivity of the acquiring and target banks during the pre- and post-merger periods. Secondly, as suggested by Banker and Natarajan (2008), we employ a battery of parametric and non-parametric univariate tests to examine the difference in the efficiency and productivity of the Malaysian banking sector during the pre- and post-merger periods. We find that the Malaysian banking sector has exhibited a higher total factor productivity level during the post-merger period attributed to technological progress. The empirical findings do not provide conclusive evidence on the less productive banks becoming the target for acquisitions.

Effect of Mergers and Acquisitions on Banking Sector Performance in Nigeria

Over the years, the Nigerian banking sector has undergone a series of reforms aimed at enhancing its capacity to support growth in the real economy. To achieve this aim, there is ample evidence that the Central Bank of Nigeria has relied heavily on bank capital reforms in tackling problems of under-performance in the sector. Implementation of these reforms has often led to a simultaneous reduction in the number of banks and increase in bank size, a process commonly referred to as consolidation. Mergers and acquisitions are common strategies adopted in the implementation of consolidation programmes. This study seeks to examine the extent to which banking sector performance differs between pre- and post-merger and acquisition periods. Return on assets, bank asset ratio and capital adequacy ratio were adopted as proxies for bank performance. The study employs ex-post facto research design and covers a period of nine (9) years before and nine (9) after the 2005 banking sector recapitalization exercise. Data on the variables were analyzed using the independent sample test technique. The study finds that there is non-significant negative difference in the performance of return on asset in the pre- and postmerger and acquisition periods. Bank asset ratio shows significant positive difference between the pre- and the post-merger and acquisition periods. However, the result shows significant negative difference for capital adequacy ratio between the periods. The study therefore concludes that mergers and acquisitions have significant impact on banking sector performance in Nigeria. We recommend that due diligence should adopted in the identification and selection of compatible partners in order to achieve synergy. In the case of policy-induced merger and acquisition, a reasonable time should be allowed for compliance and implementation should be closely monitored

Measuring Post Merger Performance – A Study of Metal Industry

In today's globalised economy, mergers and acquisitions activity has gained importance caused by intensifying competition liberalization and globalization, integration of national and international markets. The aim of this paper is to study the impact of merger on the financial performance of merging companies by examining some pre- merger and post- merger financial ratios. The sample consists of 9 BSE listed companies of metal industry involved in mergers during the year 2009-10. Paired sample t-test is carried out to assess the difference in performance between post-merger and pre-merger periods. The findings showed a marginal but not significant improvement in case of liquidity and leverage but the profitability results showed significant decline in RONW and ROA which are contrary to our hypothesis. The results of this study suggest that in case of M&A, synergy can be generated in long run with the careful usage of the resources. The success of M&A deals depends on post integration process, timely action and to keep check on the costs of integration process.

Stock exchange mergers and market efficiency

The aim of this article is to examine the impact of stock exchange mergers on the degree of informational efficiency. For this purpose, we apply the generalized spectral shape test for the martingale difference hypothesis to the stock returns before and after the 31 domestic and cross-border mergers completed from 1997 to 2011. The test is conducted with moving subsample windows, allowing us to detect the periods of (in)efficiency, and thus to conduct a comparative analysis for pre-merger and post-merger periods. We find that higher levels of efficiency are less frequent than lower levels of efficiency after a stock exchange merger. We also find that the impact on the level of efficiency depends on a range of merger characteristics such as the level of development, size, geographical diversification and industrial diversification of stock exchange.