Abstract:
This paper examines the effects of pre-mergers and post- Mergers on the performance of banking financial institutions in Kenya during the year between 2008 and 2013.The main objective of this study was to assess the effects of mergers on financial performance of financial institutions. The specific objectives were to: ascertain whether mergers can enhance capital adequacy and to find out how mergers can influence increase in liquidity ratio of commercial banks. The study focused on those banks that merged between the year 2008 and 2013. They are: Prime bank, CFC Stanbic bank, Kenya Commercial bank and Jamii Bora bank. This research used descriptive research design. The study used secondary data from audited financial statements of the respective banks under the period if study. This secondary data was used to taste validity and reliability. Data was collected, grouped, tabulated, and analyzed using SPSS software data was presented using tables and figures thus to drawing conclusions. Findings showed a direct relationship between pre-merger and post banks merger. The research found out that there was improvement in financial performance of commercial banks after the merger and this was conducted due to the increase in capital adequacy ratio and liquidity ratio. t-test for the mean difference showed an improvement in post-merger as compared to pre-merger period. This study established an increase in the mean of capital adequacy ratio during post-merger as compared to pre-merger period. In conclusion, merger for banks can be used as a strategy of achieving efficiency and meet competitive banking systems.
