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Merger and Acquisitions in the Czech Banking Sector-Impact of Bank Mergers on the Efficiency of Banks

Pham Hoang Long
Department of Corporate Finance Czech Republic, University of Economics, Prague, Czech
Abstract—This research paper investigates the impact of mergers on banks performance. It compares performance of the banks involved in before and after mergers by assessing the financial performance of Czech banks, over a period from 2000-2010. Performance is analyzed by using financial ratios by using accounting measures, namely profitability. Pre and post-mergers performance for a 3-year period is compared and also the overall impact of merger and acquisitions (M & As) on resulting banks. The independent sample t-test and panel data methodology are carried out to assess the effect (difference) in performance between pre and post bank M&A periods and for testing the statistical significance applied for the ratio analysis. The univariate analysis revealed mix profitability after the merger for banks with the t-test showing no significant difference in profitability before and after merger. The panel data methodology indicates that M&A positive effect on the profitability (ROE) of banks. The paper recommends that the banks should come up with more aggressive strategies that would improve their performance, financial efficiency, in order to gain the most from post M&A. Furthermore, our results indicate that firm size and growth have significantly positive relationship with firm profitability while debt capital decreases firm profitability.

Index Terms—merger and acquisition, financial performance, profitability, Czech banks

Cite: Pham Hoang Long, "Merger and Acquisitions in the Czech Banking Sector-Impact of Bank Mergers on the Efficiency of Banks," Journal of Advanced Management Science, Vol. 3, No. 2, pp. 86-92, June 2015. doi: 10.12720/joams.3.2.86-92
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