Impact of Merger & Acquisitions on Financial Performance of Public Sector Bank: An Application of Camel Model

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Santosh Kumar, Sumita Sinku, Ashish Dubey, Bipin Chauhan, Manish Kumar, Satyam Sangya


A vibrant economic system reflects economic well-being, which is closely tied to ethical banking practices and procedures. A robust banking system ensures timely fulfilment of depositor obligations and promotes the optimal utilisation of resources. Mergers and acquisitions have become a vital strategy for expanding geographically. Acquisitions usually occur when a corporation buys a controlling interest in an existing company to gain administrative control. On the other hand, mergers involve the combination of two or more existing firms into a single entity.

The purpose of the study is to examine the financial performance of four acquirer banks that have gone under M & A with effect from 01.04.2020 by applying CAMEL Models. For evaluating financial performance, CAMEL Model has been used which measures the financial performance of banks on the basis of five parameters such as Capital adequacy, Assets quality, Management, Earning quality, and Liquidity. The Annual report of banks from 2017-18 to 2022-23 has been used for evaluation of financial performance that has been collected from the website of concerned banks. Data from 2017-18 to 2019-20 has been considered as pre-merger period and Data from 2020-21 to 2022-23 has been considered as post-merger period.

F-test and T-Test has been used for analyzing and comparing pre-merger financial performance and post-merger financial performance. The analysis concludes that all the acquirer public sector banks have had a substantial enhancement in terms of financial performance indicators based on CAMEL Models. In accordance with the ongoing worldwide trend of consolidation and convergence, it is imperative that the Indian banking industry undergoes restructuring through mergers and amalgamations expeditiously. This will enhance its capitalization, technological advancement, thereby fostering a more amicable and competitive environment.

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