MERGER STRATEGIES AND THE PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Diana Aketch Lunzalu, Dr. Stanely Kavale

Abstract


The main of this study was to analyze the influence of mergers on commercial bank performance in Kenya. The study examined following specific objectives; the Influence of vertical mergers and conglomerates mergers on the performance of commercial banks in Kenya. The study adopted a descriptive research design and targeted 11 merged commercial banks in Kenya between the period of 2017 and 2023. The sample size of 112 was determined using Yamane formula. The study used structured questionnaire to collect primary data and the Statistical Package for Social Sciences version 26 was used to analyze data. Descriptive and Inferential statistics was used to establish the relationships that existed between the variables. A pilot study was done to determine the reliability and validity of the research instruments. Descriptive results showed a strong and positive relationship between mergers and commercial banks. Inferential analysis showed a statically significant relationship between mergers and performance of commercial banks. Correlation analysis showed that Vertical(r=0.658,p=0.001), and Conglomerate (r=0.641p=0.001) have significant linear relationship with the dependent variable performance of Commercial banks. The ANOVA test showed that F-calculated 11.37 was greater than the F-critical 4,55 and hence linear relationship between the mergers and performance of Commercial banks in Kenya. Based on the R – Squared, the model is able to explain 45.3% of the changes in the dependent variable. The research concluded that commercial banks that have undertaken mergers and acquisitions have seen an improvement in the customer satisfaction and a growth in their market share. results indicate that vertical mergers comes with the benefits of reduced operations cost, efficient and streamlined operations leads to expanded market portfolio, reduced competition and aspects of monopoly benefits by consolidating small market players ,banks accessing new markets and new customer segments as a result of the conglomerate merger strategy. The study recommended that the bank executives are inclined with aligning their strategic goals to the choice of merger strategy to be implemented. The managers are encouraged to invest in deep research to find out the benefits accrued from each merger strategy. The managers are encouraged to invest more in activities of vertical mergers that align with the needs of the bank.

Key Words: Merger Strategies, Vertical Mergers, Conglomerates Mergers, Commercial Banks, Performance


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