Evaluating Mergers and Acquisition as Strategic Interventions in the Nigerian Banking Sector: The Good, Bad and the Ugly.
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Date
2012
Authors
Oghojafor, B. E. A.
Adebisi, S.A.
Journal Title
Journal ISSN
Volume Title
Publisher
Canadian Center of Science and Education
Abstract
This study evaluated Merger/Acquisition as an intervention strategy in the Nigerian banking sector. The objective
was to identify whether this strategy has actually achieved the desired result for which it was purposed, especially,
in the popular Nigerian merger of 2005. To this end, the study was carried out using both primary (questionnaire)
and secondary (banks financial statements) data. 100 copies of questionnaire were administered on the management
members of the sampled banks. From the three hypotheses that were tested; hypothesis 1 result revealed the
calculated t-statistics (t = 6.591 P < 0.05) signifying that, Merger/Acquisition had helped to curb the distress that
would have occurred in the Nigeria banks during the period it was executed. Hypothesis 2 which measured
performances in pre and post-merger showed that, the average capital of banks sampled in pre Merger period was
N1433.20 million while post Merger period was N6358.76 million and the difference was statistically significant
at 0.05 level (t = 6.755, P < 0.05). Profit recorded for pre Merger period was N 2192.48 million while post Merger
profit was N16839.12 million thereby creating significant differences between pre and post Merger profit which was
statistically significant at 0.05 level (t = 5.276, P < 0.05), implying that, banks performance in post Merger was
significantly different from the performance before Merger. Hypothesis 3 evaluated whether bad corporate
governance was responsible for this merger; the calculated t-statistics was (t = 3.197, P < 0.05) and it was decided
that there would not have been need for merger if good corporate governance had been in place. Based on these
findings, it was recommended that merger/acquisition should not be hastily implemented; rather, it should be
carefully applied when the objective for the intending firms is to achieve synergy; and that, corporate governance
should be given priority attention by both the regulatory agencies and shareholders so that erring bank directors can
be sanctioned appropriately.
Description
Staff publication
Keywords
Merger , Portfolio investment , Consolidation , Intervention fund and corporate governance
Citation
Oghojafor, B. E. A. & Adebisi, S.A. (2012), Evaluating Mergers and Acquisition as Strategic Interventions in the Nigerian Banking Sector: The Good, Bad and the Ugly. International Business Research, vol. 5(5).