Merger & Acquisition in Indian banking Industry: An Event Study Approach

Journal Article

2013

Published in: Australian journal of basic and Applied Science (1991-8178, ISI Indexed Journal)

samontaray, Dr. Durga Prasad . 2013

In today’s globalised economy, mergers and acquisitions (M&A) are being increasingly

used the world over, for improving competitiveness of companies through gaining

greater market share, broadening the portfolio to reduce business risk, for entering new

markets and geographies, and capitalizing on economies of scale etc. In this paper we

have done the research in the field of Mergers and Acquisitions (M&As) in the Indian

banking sector. Using a sample of 20 M&As deals in the Indian banking industry

during the post-liberalization period 1993-2010, We analyze the impact of M&As on

the shareholders return (Average Abnormal Return) of the acquiring banks. For the

purpose of my study We used the Event study and checked the significance level. The

study has been done for Public & Private Banks, only Private banks, only Public Sector

banks (PSBs). We used the Simple T-Test, Paired Sample T-Test, Wilcoxon Sign Rank

Test. The findings of the project states that M&A as an event does generate Average

Abnormal Return (AAR) for acquirers (nearly 6.5%) for both the private and public

banks. It created 3.56% and 10.45% of CAARs for public and private banks

individually. As per the Simple T-Test there is some abnormal return to all investors

and more to private sector bank investors, whereas the Paired Sample T-Test and

Wilcoxon Sign Rank Test suggests there is abnormal return for all bank holders and

private bank holders but not to the public bank holders.

• Publication Work Type: Research
• Volume Number: 7, Sept 2013
• Issue Number: 11
• Pages: 252-262