Effect of Mergers on Financial Performance of Commercial Banks in Kenya

The main objective of this study is to establish the effect of merger on financial performance of commercial banks in Kenya. The specific objectives were, to evaluate the effect of synergy, access to intangible assets and cost reduction on financial performance of commercial banks in Kenya. The population of interest in this study was comprises of all the 14 banks that have merged in Kenya, all having their headquarters in Nairobi county. The banks considered in this study were those that merged in the period between 2000-2011. The study used secondary sources of data from published audited annual reports of accounts for the population of interest. Financial data from Balance Sheets, Profit and Loss Accounts, and Cash Flow Statements of the 14 banks for the 11years in calculating and analyzing accounting ratios, also known as performance indicators. The study then used accounting ratios to analyze the financial performance of the 14 banks under study. For the per-merger period, ratios for both the acquirers and the targets were then examined in getting an indication of the relative performance of the acquirer and the target.