IMPACT OF CONSOLIDATION ON THE FINANCIAL PERFORMANCE OF INDIAN PUBLIC BANKS

Abstract

India is one of the nation whose economy is expanding globally at a quicker pace. These days, the branch development is so expensive, commercial banks struggle greatly to increase the region in which they operate. Second, financial analysts assess the performance of the public bank about the price of its shares. In the current climate, public banks are a fierce rival to commercial banks in profitability, low operating expenses, growing non-performing assets, and high share values. The topic "Impact of consolidations on Financial Performance of Indian Public Banks" has been chosen considering the issues as mentioned earlier in mind. Consolidations are crucial tools for the expansion and growth of the economy in the globalized world. A Consolidation is the coming together of multiple businesses via sharing interests. Following a Consolidation, the firm name may become the name of the buyer or the seller, or it may become a new name altogether. Moreover, the consolidation occurs when one business acquires a majority stake in another business. The buyer pays cash or the buyer's stock for the seller's assets or stock. It is undeniable that the buyer has the upper hand in consolidation deals. The individual or company will cease to exist upon purchase.  Based on the objectives, the research concentrated on the causes of bank consolidations in India, tried to determine the correlation between the CAMEL variables (capital adequacy, asset quality, management quality, earning quality, and liquidity) and Indian banks' financial performance, and looked at the effects of consolidations on these variables both before and after the merger. A thorough analysis was conducted of the annual reports of a subset of Indian public banks, both five years prior to and five years following the consolidations. The T-test was used for analysis, and it is followed by correlation and multivariate analysis. T-test to examine the profitability and efficiency of banks as well as the effect of consolidations on the combined banks' financial performance. Finding the correlation between different dependent variables has been done using correlation. The link between the dependent variables and the categorical independent fixed factors, such as Pre/Post-Merger, has been designed using multivariate analysis.