Mergers and Acquisitions as Survival Strategies in Developing Economies: Evidence from the Nigerian Banking Sector

Abstract

Essentially, mergers and acquisitions in the Nigerian banking sector are reform strategies recently adopted to reposition the banking sector. These were done to achieve improved financial efficiency, forestall operational hardships and expansion bottlenecks. Nevertheless, a sizeable proportion of the deposit-money banks operating in the country before the introduction of the policy of bank consolidation were classified as unhealthy as a result of a seemingly unending systemic crisis, hence, the necessity for the banks in this category to embrace the option of mergers and acquisitions as a way out of their precarious situation. The objectives of the study therefore, was to establish the motives behind corporate mergers and acquisitions, to examine whether mergers and acquisitions are ways of stemming the tide of persistent distress in the Nigerian banking sector as well as to investigate whether mergers and acquisitions are survival strategies for the banking sector in Nigeria. The method of data analysis included chi-square statistics and t-test statistic. The study found that mergers and acquisitions are options of stemming the tide of persistent distress in the Nigerian banking sector. It also found  mergers and acquisitions as survival strategies in the Nigeria banking sector before and after the consolidation policy. The authors are of the view that both industry and the regulator should be adequately prepared to monitor and sustain mergers and acquisitions activities embarked upon by a sizeable proportion of Nigerian banks that will make some of the banks to survive and eventually lead to the growth of the sector. .           

Keywords: Mergers, Acquisitions, Strategies, Survival, Growth, Banking Sector