APPENDICES

1. Publications in Referred Journals (2)

1. Durga Rao, S & Prasantha Kumar, R. (2013 a). Financial Performance of

Evaluation of Indian Commercial Banks during before and after merger.

Sumedha Journal of Management 2(1), 117-129. [ISSN 2277 - 67531.

2. Durga Rao, S & Prasantha Kumar, R. (2013 b). Physical Performance of

merged banks in India: A comparative study of public and private sectors.

Gitam Journal of Management 11(2), 40-54. [ISSN 0972-740x1.

11. Publications in Conference Proceedings I Edited Book (4)

1. Prasantha Kumar, R., Durga Rao, S and Jyothi, R.R. (2013 c). Financial

Performance of Andhra Bank during Global financial crisis: A CAMEL

approach. Dept. of Management Studies, (Eds. Dr. B. Amamath), S.V.

University, Tirupati. . 2. International Conference Proceedings, Bharathiar University. School of

Management and Entrepreneur Development held on 9" and 10' of January,

2013. (Accepted). Title: Impact of Corporate Social Responsibility on

Corporate Financial Performance: A Case Study on IClCl Bank.

3. Murugaiah, K., Jyothi, R.R., and Prasantha Kumar, R. (201 1). Best Practices

of Field Work Curriculum: An Overview. Professional Social Work - Best

Practices and Innovations in Teaching, Research and &tension (Eh.) ,

Authorspress, New Delhi. [ISBN: 978-8 1-7273-5 10-41.

4. Jyothi, RR., Murugaiah, K., and Prasantha Kumar, R. (201 1). Child Survival:

Need for Government and NGO Participation. Professional Social Work in

India Rhetoric and the Realily (Ed.), Western and ZahmrHussain

Publication. [ISBN: 978-81-9014-896-41

III. Conferences (3)

1. International Conference on Corporate Governance held on 30' and 31''

January, 2013 at Dept. of Commerce, S.V. University, Andhra Pradesh.

Paper Title: Corporate Governance Practices of Indian Banking Industry.

2. A 9' International Conference on Business and Finance (ICBF) 2012 held on

6' and 7' ~ m ~ , 2012 at Icfai Business School, Hyderabad.

Paper Title: Impact of Mergers on the Financial Perjtormance of Indion

Commercial Banh

3. Participated in two days Annual Bankers' Conference, 201 1 (BANCON) held

between 4' and 6~ November, 201 1 on "Competing in the Defining Decade

for Indian Banking" organized by Indian Overseas Bank (IOB) jointly with

Indian Banks' Association (IBA) in Chennai.

IV. Seminars (9)

1. National Seminar on "Risk and Insurance Management-Contemporary Issues

and Challenges" held on 22" -23" December, 2012 at Department of

Commerce, Sri Venkateswara University, Tirupati, Andhra Pradesh.

Paper Title: Growth and Development of Insurance Sector.

2. National Seminar on "Industrial Development and Inclusive Growth during

the Reform Era" held on 28Ih and 29"arch, 2012 at Department of

Economics, Sri Venkateswara University, Tirupati, Andhra Pradesh.

Paper Title: Bank Finance for the Development of Small Scale Industries

(SSIs): An Analysis During the Industrial Reforms Era.

3. National Seminar on "Psycho Social and Human Rights Interventions in

mitigating the problems of disaster affected people (with special reference to

Natural Calamities)" held on 24' and 25' September, 201 1 at Department of

Human Rights and Social Development, Sri Venkateswara University,

Tirupati, Andhra ~radesh.

Paper Title: Role of Government in Disaster Management.

4. National Seminar on "Emerging Trends in Financial Services: Challenges and

Opportunities" held on 2 5 h d 26' August, 201 1 at Department of Business

Management, Sri PadmavathiMahilaVisvavidyalayam, Tirupati, Andhra

Pradesh.

Paper Title: Predicting Financial Distress using 2-score Analysis.

5 . UGC National Seminar on "Micro Finance: Issues and Implications" held on

27' and 28' March 2011 at Department of Commerce, Sri Venkateswara

University, T i a t i , Andhra Pradesh.

Paper Title: Micro-Finance Institutionr: Expansion Strategies.

6. UGC National Seminar on "Micro Finance: Issues and Implications" held on

27' and 28' March 2011 at Department of Commerce, Sri Venkateswara

University, T i , Andh Prade~h-

paper Title: women Entrepreneurship through SelfHelp Groups.

7. National Seminar "Social Welfare and Inclusive Growth and Development

with Special Reference to India" held on held on 25" and 26' September 2010

at Department of Commerce, Sri Ramakrishna Degree & P.G. (Autonomous)

College, Nandyal, Andhra Pradesh.

Paper Title: Inclusive Growth: Policies and Challenges in India.

8 . National Seminar on "Entrepreneurship - Catalyst for Women Empowerment"

held on 21" and 22" September 2010 at Department of Commerce, Yogi

Vemana University, Kadapa, Andhra Pradesh.

Paper Title: Role of SelfHelp Groups Promoting in Rural Empowerment.

9. UGC National Seminar on "Strategies for Lifelong Learning and Earning"

held on 13" and 14' August, 2010 at Department of Lifelong Learning and

Extension, Sri PadrnavathiMahilaVisvavidyalayam, Timpati, Andhra Pradesh.

Paper Title: Learning of Women through Eras: Policy Perspectives.

V. Workshops (5)

1. National Workshop on "Latest Trendr in Global Management" held on 24'

September, 2011 at Siddharth Group of Engineering Institutions, Puttur,

Andhra Pradesh.

2. National Workshop on "Promotion and Protection of Human Rights" held

from August 14"o 18', 201 1 at Department of Human Rights and Social

Development, Sri Venkateswara University, Timpati, Andhra Pradesh.

3. National Workshop on "National Programme on Technology Enhanced

Learning (NPTEL)" held on 5 h d nd6 April, 201 1 at Indian Institute of

Technology Madras, Chennai, Tamil Nadu.

4. National Workshop on "Art of Writing Research Article in Commerce and

Managemenr' held on 23 and 24 October, 2010 at Department of Commerce

Financial Studies, Bhmthidasan University, Tiruchimpalli, Tamil Nadu.

5. A one week National Workshop on "Research Methodology" held between

16' and 21 August, 2010 at Osmania Unil~ersity Centre for International

p m m e s , Osmania University, Hyderabad Andhra Pradesh.

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Rationale for Mergers a d AcqpiSitiooa

There has been an mcrease mthe number and slze of M & As aaosacUons m aU seetors of the company, espenally in the financial services sector Deregulahon and advances ~n fechnology are wrdely held as unporrant factors that havc ended tbe dIshnchon beoveen banks and f i d tntemxdkmes and h s has huther led to an unpatlulled nse m number of M & As m fmaocial cornparues ~RDSS globe Besldes. to face tbe ever-mucreasmg mmpehuve pressure tbcsz c 0 m p ~ e . s may look for M & As are means to oham scale of economies and e5c1e1k3 gasns

Humpbey. Wdleson, Bergendah1 & &&~lom (m) argues that busmess consolidation occurred orimarilv because of financial and tecbnoloaical innovation &at altered &e produciim functions of financial &IS. It p v i d c s a range of bem5t.s to the partics involved in the deal. Piper and Weis (1971) argue that M & A s occms to ovcraome geographical limits on bank expansion. Hannan and Rboadcs (1987) rejects tbe hypo%hesis that poorly-mauagcd firms are morr likely acquisition targets than other firms Cbaog, Gup. and Wall (1989) ti& -a in support of rpengkeering 6s a -vation fpctor for hank acquisition. Phillips and Pave1 (1986) found tbat aoquiring finns use mexgm as a vchicb to iocrease tbeir marka share add profits. Roae (1988) m1~:1des that the mergers results in i n c r m in profittbility, markt sbaq growth rate, marks power and stock price and denease in tax liabilities. Cheog. Cup, and Wall (1989) and Palia (1993) mnclmfe thar m w business oppommities play an important role in banl's takeoycr.

SIIUIV~S, K. (2010) found that the Peposits. Advances, Business, Number of Branches, Number of Fmployees and Rofits of both pubhc and pnvate banks w e nnpm%tsed after mergers Funher, h s results revealed that Pnvate sector banks were dormnahng over Pubkc sector banks Narayan, C Baser. Mamta Brahmbhatt (201 1) found that tbe Earmng per Share. h r d e n d per Share. Pcpos~ts. Advances and Profit &I Tax were unproved dunng post magcra Padmasre Jalandhar, K . Bhxatb~ Devi Anchula and Achan, A S I (2011) malted that the performance of sample banks 1s rmproved dunng . the post mergers In tenns of growth in Total Assets Profits, Revenues, laveslmcnts and Deposcts Ishwara, P (2011) evaluated the performance of Regtonal Rural Banks' amalgamahon m Indla tn tenus of Number of RRBs, N m b u of bmwhea. Deposits, and Total Assets and were amproved due to unnl@mahons

There is less number of studies on physical performance .of merged banks. Hence, the prepresent study is focused to evaluate physical ~~rformance of merged banlct in India.

1. To evaluate physical performance of merged banks during pre and post mergers.

2. To compare the physical puformaoce between Public and Ptivate sector merged banks.

Research Hypotheses

H,,,: Growth of deposits is independent of bank mergers.

G: Gm? of advances is indepdent of bank merge=.

%: Growth of business is independent of bank mergers.

%: Growth in number of branches is independent of bank mergers.

&: Growth in number of employees is independent of bank mergers.

%: Growth of Assets is independent of bank mergers.

H,: There is no significant difference in growth between public and private sector banks in terms of physical indicators.

Data and Methodology

As recommendations of the Second Narasimhan Committee Repon (1998) on banking. there were six Public Sector Banks and three Private Sectors banks involved in merger activity during the period between 2003 and 2010 and the same were considered for the ptesent study as dvcn in the table 1. The present empirical analysis on physical perform&e oFmerged scheduled commercial banks durine ore and cost mereers. Two reeression models are formulated to measure thentributiin of selecied physical inkcators towards Rofits and Return on Equity for wbde, pre and post-merger periods. The required data were collected from "Statistical Tables Relating to Baolrs in India", an antmd publication of the R-e Bank of India. The coUected data 1s divided into three years before and after-mergers, as it may reap the complete efficiency gains within the threc years (Rhoades, 1998).

T&I: e t b m of the M W B.nLs

SNo M e be& h.h Date of Merger

I P~lnjab NUioonl Baek (PNB) Ned-adi Bank Ild. 1-2-2003 2 M of BIlmda (BOB) South Guj-t Losal Area Bank 25-6-2004 3 OritnWBloLof Global Tsurt Bank Ld. 14-8-2004 - <OBQ 4 tClCl S q l i Bank 1942007 5 IDBI UmCed Wcatcm Bank 3-tCL2006 6 PedsnlB.n*(FB) w s h Bank of Kurandwad ' 2-9-2006 7 Indim Ove- Bank nOB) Bh- Ovc- Bank 3 1-3-2007 8 HDR W o n Bank of Punjab 23-5-2008 9 SUte BBnL of TIXI% (SBn S w B d of Sa"rashm 14-8-2008

phTsk.l P6-r- Indicators

Devamja (2000) examined the physical and financial performance of a horticrrlturc -tive society by using the veah!n like mnlbenhlp, retail outlug shzue capital, owned funds, total assets, long-term investments, fixed .ssets. wnLiog capital, total liabitities. and sales. Shekhar ct al. (2003) sIudicd thc growth rates of physical indicatm's of disUict cuoprative banks on tbe variabls like rmmba of branches. numbe~ of employees, membership. number of loan accounts and mnnba of deposit =accounts. Harshitha, GS. (2007) analyzed physical pzfamamx of district m v e banks in terms of groM1, in number of bmxks e a p l o y a s m e m M p wd deposit aca,rmts. Bihamjit Singh (2011) adyzed thc groarth rate of sIected banks in terms ofdqmits, number of braacbes. employ- d t deploymmt and borrowings.

T h e p h r s i c a t p c r f ~ i n d i c a t o r s u t i l i s e d i n m e p t s e o t ~ ~ of Deposits. Advaoceq Bus- Number of Branctn, Number of Employees and Taal Asw*i ba%cd on thc preview studiea in order to evaluate physical # a ~ ~ l ~ n o e of merged scheduled commgcial banks in M a

B . n t w i s ~ g r o a ? h ~ a o f ~ t h c p h ~ u l p w m c e r s r u e r e m m p l t e d bycoar ida iog~va luesofpcandpDstmagas . ' I h e ~ d e v i a t i o n is computed to lorow the vaciabil* in the data As a di an unequal gtandard&viationw~obsmdbetwaa~pre~postmrgas. H-.Wdcfis pired last (a two sample assomin& unequal V a n a ~ a ) was applied to dctmmk significaot impmv-t between pre and post mergas. The grPwth rates of physical indicators are cornparrd baMen public and private sect- banks

and tested its sigoificance also. The mean growth was calculated wifb the followmg formula

P o s t m e r g e r - P r e m e g e r G r o w t h r a t e = P r e m e r g e r x 100

Regression Model

The relationship between Profitability and its determinant of banks was analysed using regcession models by Bourke, 1989; Molyneux and Thommon, 1992. Sharif Rayhan Scddique., and Mafuul Islam, A. E M., 2001; DCvjnaga Rasiah, m10: Poolad Danashvar., and Ramesb, H.N., 2012. Th variaMes used in the prrsent regression models were cxnaEled from thc above literaawe on the bank pmfttability. There is an invase relationship between deposits and profitability and hence Ibe deposits are excluded from the study. S h . tbe business of bank wmpxises deposits and advances it is also excluded from the regression model. TI%- are two regression models separately fomdated wilh dependent variables (profit afta tax and Return on Equity) and independent variables (Advanncs. Number of branches. Number of employ- and as-) during whole study. prc-merger and post-merger period and the equations are as follows:

Prof i t i t = P o + & Adwit + p2 Brana + p3 Emp', + p,Assetsit RoEit =Po + Adwit + p2 Bra% + p3 Empl + assetst st,

Where.

profitfit v t s Prof* for bank i at time 1

ROE, repnxnts Rmnn on Equity for bask i at time t

0, 0, 8,. Br 4 0. = martnot

Bmn, e, and Asset. Number of Brancbm, Numba of Ebployas aod Total Asrts r e q a ~ i v d y .

46 QITAM Jamwi a M r n u ~ ~ ~ e r r

w and Discussk.=

roarc 2 cmwb ot apoara (Rr m kzkhsi

Irst M- Growth Wekb's b - r Posc-r nn (46) t-vnlae

PNB 5591261 333(%32227) 1035894033(15888473 85 27 4 604'

BOB 6071S87(626128) 9997047 667(2246567) 64 64 2 9151-

0% 2765930333(266295) 5401458 667C872343) 9528 50048'

RIBS 1039436 33x4545073 7625100 667C3463824) 633 58 3 265lm

K11a 11100351(4944532) 22159849 67(2139325) 99 63 3 5555'

W 1320% 333(213566) 2656532 667(533682) 101 16 402548'

lea -47(381637) 84393% 667(1568784) 106 81 4 675C

HDH: 534KXW.333(1609705) 17293414 3313323424) 223 34 5 6027"

SBI 394za4890636635) 8267073%9790456) 10971 7 1726-

-S1- &I DI oar &"el

" si#,yh-T M ru 001 Iml. Nne m ,ismms a pa=- ~COfCcofc &"i dew',-

dep6r.v 1s the pmnary fuocnonon of a commeslal bank by m & W L s z g s from tk public for ils mbxnx&ahcm process. The deposlts comprises of public depmts, savings, bank deposlts, demand deposits, mlsallamous deposits and deposits oufs~de W a The bank w ~ s e mean growth iatc ofdep&x nnd the significance Improvement between pre and post mergers as BhOIHn m tk table 2 The depw~ts of HDFC bank reached the htghest g m d mte (223%) whereas BOB recmded a least growth rate (64%) among aU the merged banks. The overall deposits of the merged hanks ~mproved sigmiicanily dunng post mergers except BOB and DBL

(Rs in in)

BuL M a a G r o d Welch's - Pmt-me- rate (%I t -dye

FB 758021.3333(130669) 1873188.333(374937) 147.11 4.8616'

IOB 1522484(1326322) 6078995(1391633) 299.28 4.1052'

HDFC 3585744.667(1071145) 12823210.33(3062052l 257.62 4.9321"

SBI 26711749.67(6764744) 64371226.67(1075%36) 140.98 5.1322"

-sig"@mm rcW1 cr 0.05 rme1 - Si&acc I-el 0 01 &I; .You. Th. fis-s ir p- indisndisUr sf& -66

The secondary function of a commercial bank is to issue loans and a&- to dl types of persons. Advances by wmrnencial banks are made in different fonns such as demand loan, term loan, cash credit. overdrafI etc. The bank wise mean growth rate of advances and tbe significance growth between pre and post mergers as presented in the table 3. The advauces of JOB recorded the highest growth rate (229%) whereas BOB accounted for a least growth rate of (93%) among all the merged banks. The overall advances 'of ihe merged banks improved significantly duriog post magers except BOB.

PNB

BOB

OBC

rnBl

IClCI

FB

IOB

HDFC

SB1

M a n

Prr-mergu P&-

8423601(1421912) 16434435.33(2959299)

9286278.333(1040152) 10992945.52V335932)

4129647.667(500321) 8835289.333(1793616)

2944025.667(2714501) 15896033.67(5510608)

21089143.33(9210958) 42997599.67(437%52)

2078581.667(344199) 4529721(906277)

5603231(1702970) 14518391.67(2960284)

893404X2669346) 301 16624.67(6380799)

66132238.67(10312930) 147041965.7(20521057)

'Si~~iF.-e k-"el ot 0.05 &vet SigNfi-e h i rn 0.01 I m l ; Note, 7hc Iigures in p-uheheii indiscllu stamdad dcv idm

The business of auy commercial hank is Ihe total intermediation pxes.9, i.e. mobilising deposits and issuing loans and advances. Ihe hank wise mean growth rate of business and the significance growth between pre and post mergers as narrated in.the table 4. The advances of D B I marked the highest

growth rate (439%) w h w BOB recorded the least p w t h rate (18%) during fhepost-merger period. The business of ihe merged banks improved significantly dwing post mergers exaept BOB.

BOB 2700(45) 1%2(1334) -27.32 - 1.4601"

OBC %2(28) 11 831773 22.W 4.6106'

mBI 66(30) 480(41) 623.62 13.8316-

IUCI 48704) 1145(347) 135.02 3.2109 " FB 439f17) 583(41) 32.85 5.5710'

IOB 1490(251 1920(m 28.87 9.0892'

W E 562(110) 1707(287) M3.86 6.4410-

SBI W9(79) 12625(1079) 36.65 5.4209-

.. . swqi-.= kl D1 O M k"d - simi/i-.ce &I nr 0.01 Lml. Hau rhe fi6rm.s i. -b &*, dm-"

The geographical expansions of bank bmnches are essenbal for saving

pamtial customen anoss the areas. nx bank wise man growth rate of brenches and the signiiiumce improvement h(- pm and post m m g ~ ~ ~ as -bad in the iabk 5. 'Ihe numbcr of bnnchs of IDBI acmumed for the highest growth rate (623%) wbcreas BOB reaorded to a st- decline of 27% -g all the merged birnks. The ovaall oumtu of brnocbes of the he mcrgad bpmved significa~~liy during post meagas excep BOB and ICKSI.

IClCI 14069(3721) 36201(3936) 157.30 7.07658"

FB 6351(128) 7043t488) 10.90 2.3754

IOB - 24256(97) 25611(1012) 5.5847% 2.M73 " HDFC 15128(6227) 53442(2039) 253.26 10.1272"

SBI 1%559(10244) 209709(11789) 6.69 1.4583-

Human resource is the most valuable asset of any aganization to serve aU the spheres of any business. The employes considered for the present rmdy includes officers. clerks and sub-staffs. Tbe bank wise mean growth rate of number of employees and its significance improveImn1 &%ween pre and post mergers is illustrated in the table 6. The number of employees of IDBI reached the highest growth rate (223%) where both PNB and BOB ream!& a decline at a rate of -3% and -7% respectively among all the maged banks. The number of branches of the merged banks improved significantly during post mergers excep PNB. BOB, FB and IOB.

m BOB

OBC

WBt

KlCI

FB

10B

HDFC

SB1

7be total rsacu rd banks comprises of a h balamer. investmnts. advances and fixed asei.~ &. Tbc b& wise nmn # rate of aSeC3

w W 1 9 ' 1 L 9 8 L ' I t m 6IEE'O 6 6 6 6 s sx SEE£-0 Z I E E O I PI1"SV WOI.

p* m e - 0 SLZWWI r* 196~x1 ZE%-SS- r* b z w o E+Z.SLZ- s-daldrua 30 -ON

r* 866CZ 8 E I Z W sw 6 1 2 2 . 0 0 2 8 0 - W nr E L 0 6 0 I E Z 8 Z E a U m a 30 .ON

sx SZZz'Z 68S0.08- m Z$OZ-O U E V 9 m E 6 0 6 ' 0 b5OE'LV- m"APV

Z V I E 8 8 6 W O W 6 8 1 LZELLZI 'daJr=W

93IQau.A

x p e q l o ~ a s qqnd 1aAo Supeufmop am q m q 4- ~ J E A ~ a~urs paamfar s! s!sawodKq nnu ap ' a m a ~ '(so-0 < 6) IaAaI so-o m=%@W! LMrn =am (sasna) m a la=% ?I=AW pm (sasd) s~wa 10- agqnd sa~qrnre~ am ne 'Atpapsw~s 'uasoq3 =aM sww mma -A@ aann pm qqnd n s JO srqeapq ayl (IB s a w IIIM~

aw asodmd m JOLI .6 a1q-a aw o! w+@q SE =oleam a-04 @a!sLqd $0 - q q m q pa%- lolsas a$~hud p w agqnd am uaarmaq apsm mm u o s ~ m m e 'Kpms aql 30 e-4 lsel aw 4 8mb.ro~av

The f k i regression model redud as sbown in the table 10 represents, Pane1 h B & C the difkmtial intercept coefficiens for all the three periods. All the ind-t variables used in ttus model are insignificant at 0.0.5 kvels The computed R square value (0.775983) of the Panel C suggests that the selected physical indicators con~bu ted towards profits during the post merger period only.

V.rhbks Codkicr)t t - m d u s CaMcisnt r-valus CocBrisnt t-valuc

1- 20.1767 22.7059 15.4132

Advma. 0.0001 0.2830" 0-OOM 0-2359 - O.OW1 0.7051 " No. of B r m c k s 4.0001 0.3865 -0.00013 0.244Sa 0.CCnl 1.7354 rcs

NO. of -0- 4.00'75 2.1647 ms 0.W65 1.1747 0.0055 4.4290 . Tool Assets 0.0005 2.2625 O.CCn3 0-9839 ms 0.0006 5.7197 .*

R 0.5809 0.3040 0.92482

Sig&5c(~.u ru 0.05 &I; - Sigmifi- ru O . o l ( n r l : * Non si- m 0.05 M

'Ihc mmRs of the second qyesskm &I mmated iu the table 11 with differential wefficiafs for all the h periods. AU the variables nr: insigdkant at 0.05 level except numbs of employees and Total Assets in pami C .nd these tw arr the only significaot of the ROE. The calculated R square value (0.9248) of panel C suggests that tk seleaed physical indicators contributed towads ROE of the banks doring p 0 s i - m perid &Y.

'I& W W focurPcd ar the physical pufcnmaux of Indian bank m % r r ~ ~ y a r ~ 2 0 1 0 . ~ p h y s i c a l p a d a n r m f e i s b d o g ~ out rn I ~ ~ Y s SoWIb - of Drporits. -, Business, Number of branches, Nllmbcr of employees and md assets.

The overdl physical performance of the merged banks showed s igai f icdy amptilied d t s during post me- except Bank of Bawh, The dsstd phy§ical indicemn mmlxibuted tow& both Profits and Raurn

Equity of thc banks during post-merger puicd only. Fmally. the banks

should plan properly to reap improved performance, which tends to become the leaders of this sector to sustain their position in the global competitive world.

REFERENCES

I. Banknet India. uX)6. MBA in Indian Baolring SysCrm - h EXecutivc HaodbOOk PZI

2. Bhario, T. M. 2012. 'Tczhbanking m a i m in thc Fuauistie Miu, Bankkg System". Baocon - 2011 Chnfereoce. pp.27-34

3 Bibamjit Singh, 2011. .'Stludy of d x Grad As- of B& A Oomprrnrive Srudy of HDFC and S B O r I n d m l l Journal of Rsseanh io Finaocc 61 MmkCiiUg. 1 0 ; 59-71.

4. B&. P, 1989. "~oacsnmtioo and O U r r Lklsrminnnts of B d Rofirabitity in Euopc. NoRh Amris. d A- 1-a1 of Banking and Pi- 13. 65-79.

5. Bnmsr, m. ~pplicd Mcrgm d Acquisitions. John Wilt], & Sons. Inc., H- New W y pp. 45-50.

6 Cbcog, S.. L. Cup, and Wdl, R, 1989. " F ? oZ B d m". 3-ll of Moluy, cdt snd Banking. 21 (4): 524-536.

7. Demmj4T.S. 2000. Texfomurrs of HOPCOMS. - A. UWnormk eV&WiLXILXI. M. C-.-Rev., 38 (2); 82-96,

8. ~ R r d r h u ) l O : ~ ~ a t o f ~ u A ~ m ~ B a t s in W y N . Eznqean hmrmd of Exonomb. RD.IICe snd A-n Sci- 19; 765%

9. ~ Y - R R L l d . ~ Z O l 1 . T ~ u ) l I - S a b o g I h ~ f a r c b c o a l era of M M - r a a i e y . ~ M i a i o d v w L U - . . ~ 0 1 ~ _ 2 0 I l - #

lo. w. T. K, md ltbwles. s. A. 1987. -A+- Tp~eta md Motives: * of dY w w -. Fkvior of EeoDaoic* a d Sutinie. @br&): 67-

74.

11. ~ G S . m . M l l A l r p l i d o f - - ~ - - A C h e d ~ B m * S ~ I o m u t r M S . U o i v a r i t r o f ~ S c i m m , wul*d

IL Hmqbrcy. D.B., W%- M.. G & Lt.dblw 7. 10M &eFo from I am&,. Pl)mar Td.sdom b -", - of bmk - 30. 1631-1652

13. IrBaur. P. 2011. 'A F i 4 Perf- Aatlyrir of RRBs: Rt mrd PaU T - f d a " Jmmd of Reua~h , 20); 142-151.

14. ibr, R.W. M06. Mcrgr. d Arpasirirm by UNEa' - ma bpkaic-. N- fsnaq ---

IS. M a d y y x . P. d Tbmmon I. 1992. of B* Rolit.bilitr- A w. I d of S W n g d FlDIDa 16; 1173-1178.

16. ~~rr imhao U. 1998. Ctuptcr V, pm 5.13-5.15.

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VJowaweJd lenadaauo~

IU-*B."=N P I=J-P w a r n s

SUWEDW Journal of * . l u g e m

Calonnris (1999)and Howam et al ( I 994j found that bank mergers enbaoced the efIicreocy Akbavea~ et a1 (1996) found an ~mpmvanent m profit especially ~f both merger partners were

unSaent before the Allen N Berger and Ra (1996) found maeased scale of eunomes The types of cod ef l ic~a~~y gams rekvanf to Europe may be rather Merent than those fwnd lo

W l He+. .h- - I& 2013

' The research sm&a that were undertaken in the area of M&A in developed d p s like

Europe, Greek, USA and some of the developed Asian wunlries produced mixed resub. There are a less number of studies on M&A's in India especially in banking -or. At this poiat, the 1 pesmt study f-d a evalmte the f i i c i a l performance of pte and past mergers d banks in

the US. B a ~ al. (2000) f d that, tbe foreign banks faced higher operating costs and lower India. P0*biliw d"-ti~ w. Spindl and Tarhan (1993) and Cornen and Tekanian (1992) Research MethodologY fouod sllficant wO-ts in Return 00 Equity, Profit Margin, Employee productivity, growth cinancial pafo-ce of -ged b a h can be aoalyzed using accounting ratios 01 share of-, 1- and depmie due to -. B.D. Diaz et al. (2004) concluded that the acquirerxs price =he present study adopted acunulting ratios only. The lhird -gQ wave

I%-*- prohbili@' and paf- were increased due to acquisitions. it was more period in from 2000.1ill &te is so -t because the second N a - i h n

, significant for bank eiti- t b n for ~n -bank acquisitions. Prager (1998) showed that US banL mzwm led to increased market power.

(1994) and * (19%) showed no evidence on effrcrency g a k 6- bank magaS. (1998) niw case studies on mergers, resutted in slgnsicant

in line * we-- projections. Four of tbe nine -gem were ~nty got sum in impmvising cost 6 i m c y after acquisitions. Vander vennei (2002) found a*g banks w b acquired h u k s in terms of profit and cost efficiencies before the transaction took P-. F*. profit mbanced due to mergers without gains in t- of -t efficiency io

QDS~-- mergm. Rose (1987) showed that acquired banlrs are more profitable and I- - - - - prim to l k ~ "ga. Fwtkz, he famd that the profitability did oaf

enbawx fa the .aEuiriog t-mb after acquisitions. ~ai~iani (1997) found IIO nnpmv-t after -W, -Q& he did fmd mat the maged banks mtpafompd the combined results of the mags bef= m. LLioder aad Crane (1992) famd no iroprov-e in opaafing ~ O n a S ~ o r g r o a R h i n ~ ~ ~

At thisjuncnus it is a h -5 to Ieview the Lituature on M&A in Indian context also. Ja- (2010) fcuud the private secta maged banks .UW ova the pubtic -or d in F-ilityaod ~rsuidity but in case ofcapital a&qacy and NF& the are

I'km and (2010) suggested that to - extent msga activity gat s-gded in

RepoR (1998) made r-dations for bank mergas. ks a result3 were l 7 --gas

which occuned he,,,een 2001 and 2010. Due to multiple times of -gas * =ame b a A the

mulation size to 9 banks -istkg of 6 public sedm and 3 private sgtor banks

in the table 2. -der (1 998) ~omted that about half of any etfici- gaios be

~ e e years of -ger. w o r e , the p e r f o m was measured for years

and after the merger.

h 3 h bnlio;g -. h~ KuM*(ge (2010) showed a p i t i t - signif- on m e g i c Research HyPOth- fUngri.t of-id banks. ~wamioallrao (2002) studied a sanpie of f i ~ a- (,)

Y: me is rn s i @ m di f fRem h m i d p a f v Of- before ad dlt

fm w O P W ~ and financial syoergies for four fyms after aoqui~itions. mprser with to Credit D M ~ Ratio-

K m . 3 (2010)- did UDI prwide evideoee to ruppon &e irnpm-ed cmpwate perf- H . -= % a sigaif- d i f f a a ~ s io f m h l @ - of banks and a%

a k magars in h d h bantjng. Slnjit (2002) and R a v i c h b (2010) soggmed in their r d -ga 6 to Credit w Ratio. that the did not Seem to a Ihe PIQMabi l ' iand pmdudiv= eff iary of the banb as thq. did not indicate any signiGcant diff- after magers.

mags reference to Capital -CY Ratio-

4'

f f TUEM1A Journal of I.nsg.mnt E Vo1.2. No 1. January - Mach 2013

$ H, T h e a a'-t = a c e m financial performance of banks before and afler on Assets (RoA) Renun on asset r a m Is the net profit 8merated by the bank On

4 =per wth refereoce to Cap~tal Adequacy Ratlo total assets he hgher the proport~on of average earnmgs assets, the better be the [:) 4 T b a u no st~11ficant --e rn f i ~ a l performance of b& &fore .nd resultrng return on total assets

V * ref- to Nan-Paformmg Assets Ratlo RoA = Net profits I Average total assets

8 H, There IS a slgnifrant Waanz m financnl performance of banks before aml after m a g s mth reference to Non-Pcrfwtllmg Am& Ratlo He TbRe IS no s&cant Merence m tinanclal pezfonnance of banlcs before and afier EaQ-gex with refaence to Returo on Assas

y: lksc Ih a swuticant =meace m h m l perf-ce of baoks before and after merga WltbrefereaxetoRehunonAssas

hniques for Evatuating Financial Performance of Banks Thc financial raho 1s the powerful tool to d e a m the financtd paformance of the fum

they am used to mpasure the financial performance of maged banks Among them the are Cruiit Deposit R-0, capital Adequacy Raho, NorrPerfomung Assets

on Ass* ( D i Kumar and Durga Sadcar, 201 1) and hence tbe researcher

cative of the percentage of funds lent by Higba ratio rdec t s ability of the bank to are givea by bank would also include its of the OOmpanies.

b CapW Adegnsey Ratio (CAR) A banks' caplhl adequacy ratlo 1s tbe raho of qualtfylog W to risk artjusted (or wghtd) assets. As p the Iatest RBI norms, banks m Mla should

ratlo below mmunum udicates that the bank is not adequately caprtalrzed to The ratio ensurer that the banks do not expand then busmess mthout havlng

1 . C A L ~ k r I capital + ~ i e r Il capital / Risk weighted assets 1 Yon-PerfwmWg Assets W ( N P W T h e are the as& that are OubhW to return , pkSZ@d WOT mteccst in the near €blue Tlus results m huge l o s w to a bank Thus a bank H a bw pmfd but at thc same tme low NPA is preferable to the one hawng lugher profits wth W ~ h a N p ~ ( a a i p & Durga, 2011). The net non-Perfonmog assets to loan (advance) ratlo 1s used

r mmsmre of the overall quality of tbe bank loan Net NPA's are calculated by ratucrng mklive balance of provisions outstandmg at a penod from gross NPAs H~gher raho reflects u inaxnmy of loans. NPAR = Net non perfommg assets / Loans gven .

7 2 2

Ecowmevic Model

Felix and Claudine (2008) fouod that return re~urn quity (ROE) and return on ass& (RoA) botb measuring profitability were inversely related to the ratio of non-performing laan to total loan of financial institutions thereby leading to a decline in profitability Bakar and Tahk (2009) used RoA was used as dependent variable of bank performance and seven variables including liquidity, credit risk, cost to income ratio, size and concentration ratio, were used as independent variables. Neceur (2003) aoolied a ane el linear rewzssion model and repfled a suong positive impact of capitalization . . . to RoA. The praent study employed the following regression model based on the previous studies.

RoA = P o f Bl CDR + Bz CAR + Ps NPAR

The regmion models' independent variables are CDQ CAR and NPAR; and Returo on Assets as dependent variable.

Results and Discussioos are &cussed in the following section which consists of summary of desditive statistics, average financial perfo-ce, powth rats, t-test and Regression analysis.

The sumrnary of descriptive statisttcs of the study variables are presented in the table 3. All the b c i a l indicators are increased during post-mger paid

The over all fnancial performance of bank mergess is presented in the graphl. The average financial performance of inerged banks in terms of CDR, CAR, NPA, and RoA were increased by 34% after the mergers. The pmt and pre merger mean values of these ratios were CDR 84.37 > 62.49,CAR 14.19, 11.71,NPA1.17~2.43a~RoA1.10~0.98respedivelyasshowningraphl.

123

easing impact of magers was observed on commercial banks as shown in table no 7. el. Hence, the bank mergers were able to

/ h% Not S~auficmfal J % l e w L Some CaIeuZntedfiom Anmral Repom of the MergedBon*s

ksults of Econometric Model

Tables: Results en Regreasioo Model

--

Note AII I-dues ore NonSzgnficanf

The -1011 model m l t e d as s h m the table 8 represents, the &fferentml intercept

d G % i during pre and past merger mods. AU the mdepaalent ~ ~ l a b l e s used m h model e at 0.0.5 lev+. The computed R square values for pre and post mergers are f03i098 d a 5 2 3 2 0 9 4 8 7 respecbvely The results mfmed that the selected finaoclal d c a t o r s

126

Vd f NO 1. January - March 2013

contributed towards RoA durlng the pre-merga per~od only because the entire SPA and Credits of target banks are taken over by the bidder banks.

Conclusions This paper investigates the impact of mergers on the fmancial perfomxacc of the Indian

Scheduled Commercial Banks dur i i the third merger wave pmad from 2001 to 20 10. By applying key financial ratios, it examines Credit Deposit Ratio, Capitat Adequaq Ratio, N o n - P a f o m Assets Ratio, and Return on Assets of merged banks over the study period The findings of the study show that the o v a all average finawial performance increased by 34% after the merger. The results of regression inferred that the selected fmancial indicators cmm'buted towards RoA during the pre-merger period only because the entire NPA and Credits of target banks are taken over by the bidder banks.

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