Impact of Mergers and Acquisitionson Performance of Banking Sector in Pakistan

Abstract

This research has been undertaken to evaluate the performance outcomes of mergers and acquisition a study of Pre and Post mergers and acquisition. The primary objective of this research is to study the significant developments in the financial stability of the banking sector of Pakistan. The secondary purpose of this research is to provide detailed information for analysis to the future scholars, stakeholder, bankers, and government authorities. The consolidated review of the financial ratios will help the future researchers to evaluate the longer run changes and developments in the banking sector that resulted as outcome of mergers and acquisition. To examine the influence of M&A deals in Pakistan we have used financial ratios which include investment ratio (EPS and ROI), liquidity ratio (ATD, CTA DTA), profitability ratios (ROA and ROE) and solvency ratio (DR and D/E). After thorough analysis of the research papers published on acquisition and mergers and the above mentioned financial ratios, the researcher concluded that not all the banks have shown positive performance and outcome after the M&A deal the reason for that was the banking organization in Pakistan had failed in analyzing and constructing a feasible financial plan. The present research relies on the data that is available to public through competition commission of Pakistan, Karachi stock exchange and the annual reports shown by the sample we have selected. This research is based on accounting ratios that will give the insight to the performance. The results of this study may be applied in Pakistan financial sector or in underdeveloped or developing countries. It’s useful for banks, investors, stakeholders, bank employees and even for other authorities like Government and big organizations. The mentioned organization above can develop and improve the capabilities they have to effectively solve professional problems they will face. This paper value can be identified easily because of the topic; hence it improves the knowledge about banking sector, M&A impact and 4 the variance in the performance. It provides the information that every decision maker like management, businessman and stakeholders will need to get things done value ably. Key words: Mergers, Acquisition, Banking Sector Per