Pre and Post-Merger Impact on Financial Performance: A Case Study of Jordan Ahli bank

Abstract

This paper attempts to analyze the pre and post-merger impact on financial performance of Jordan Ahli bank. To achieve this aim, two research methods used to compare pre-post-merger financial performance; first, comparison and analysis of ratios are used to compare the performance of Jordan Ahli bank during the pre-merger period (2001-2004) and post-merger period (2006-2009). MS Excel 2010 was used to calculate ratios and SPSS software to analyze. Second, paired sample t-test determines the significance differences in financial performance before and after the merger activity. The results of this study show that 5 Out of 12 ratios (41.67%) significantly improved after the merger to Jordan Ahli bank, while 3 ratios (25%) improved but insignificantly, in the other hand 3 ratios (25%) significantly deteriorated after merger, while 1 ratio (8.33%) insignificantly deteriorated after merger. This shows that merger has improved performance of Jordan Ahli bank with a total percentage (66.67%). On the basis of findings, we concluded that financial performance of merger Jordan Ahli bank insignificantly improved in the post-merger period. Post-merger leverage, efficiency ratios significantly improved, while cash flow ratio insignificantly improved. In addition, liquidity ratios includes 5 ratios, 4 ratios significantly deteriorated after merger except investment to total assets deteriorated but insignificantly, while net credit facilities to total deposits (Gross advances to total deposits) improved but insignificantly.

Keywords: Merger, Banking sector of Jordan, Financial Performance, paired t-test, Jordan