EFFECT OF MERGERS AND ACQUISITIONS ON FINANCIAL PERFORMANCE OF LISTED COMMERCIAL BANKS AT NAIROBI SECURITIES EXCHANGE
Abstract
Mergers and Acquisitions (M&A) are actively utilized for competitive expansion, with potential benefits including improved management efficiency, enhanced production techniques, and increased market power. The study's primary aim was to examine the impact of various types of mergers, including horizontal, vertical, conglomerate, and product extension mergers, on the financial performance of firms listed in the Nairobi Securities Exchange (NSE). Data was collected from 11 NSE listed commercial banks through Secondary data collection sheet and analyzed using SPSS. Descriptive and inferential statistical analyses, including correlations and regression, were employed to establish relationships between the study variables. Diagnostic tests revealed no autocorrelation (Durbin-Watson statistic = 1.767) and no significant multicollinearity (VIFs all < 10), ensuring the data's reliability. Normality tests indicated that the data was within the accepted range for skewness and kurtosis (-1.96 to 1.96), signifying its normal distribution. The absence of these issues allowed for the subsequent analysis of associations between the study variables. The study concludes that mergers and acquisitions significantly impact the financial performance of banks in the Nairobi Securities Exchange, with strong correlations and regression analyses emphasizing the critical role of leverage, liquidity, bank growth, and bank size. Findings align with previous research, underlining the importance of strategic decision-making and post-merger integration. Policymakers should establish transparent guidelines, while researchers should explore deeper dynamics, and practitioners should prioritize due diligence and effective integration strategies. Further research could focus on systemic risk implications, integration mechanisms, and stakeholder impact beyond financial metrics.
Keywords: Leverage, Liquidity, Bank Growth, Bank Size
CITATION: Juma, M. K. & Wekesa, M. (2025) Effect of mergers and acquisitions on financial performance of listed commercial banks at Nairobi Securities Exchange. The Strategic Journal of Business & Change Management, 12 (2), 43 – 58. http://dx.doi.org/10.61426/sjbcm.v12i1.3197
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3197
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