Market Based Mergers- Study on Indian & Saudi Arabian Banks

Abstract

This paper analyses the efficiency and performance of post merger using CRAMEL–type variable of selected private banks in India & Saudi Arabia which are initiated by the market forces. The results suggest that the mergers did not seem to enhance the productive efficiency of the banks as they do not indicate any significant difference. The financial performance suggests that the banks are becoming more focused on their retail activities (intermediation) and the main reasons for their merger is to scale up their operations. However, it is found that the loan to total Assets and the profitability are the two main parameters which are to be considered since they are very much affected by mergers. Also, the profitability of the firm is significantly affected after merger giving a negative impact on Earnings.