The Significance of Mergers and Acquisitions of Banks to Performance: Evidence from Nigeria

Abstract

In an attempt to reposition the Nigerian banking sector and move the nation’s economy forward, the then Central Bank of Nigeria Governor, Professor Charles Soludo, came up with a landmark consolidation policy. The options open to Nigerian banks to beef up their capital base were to capitalize their reserves, raise fresh funds from the capital market or embark on mergers and acquisitions which appear the most appealing and most feasible. The objectives of the study therefore were to examine the state of Nigerian banks before mergers and acquisitions, to assess the quality of the Nigerian banking sector after the mergers and acquisitions of banks and to investigate the significant relationship between mergers and acquisitions of banks and the performance of Nigerian banks. Data were collected through primary source and the method adopted in analyzing the data included t-test statistic and correlation analysis. The study found that there is a significant difference between the performance of banks before and after the introduction of mergers and acquisitions and that there is a significant relationship between mergers and acquisitions and bank performance in Nigeria.

Keywords: Mergers and Acquisitions, Consolidation, Capital Base, Capital Market, Banking Sector, Perfomance, Central Bank of Nigeria