Assessing the Effects of M&A’s on the Financial Performance of Ghanaian Banks

Abstract

Firms or companies merge or acquire each other in order to create synergies. Mergers and acquisitions normally occur when firms or companies are facing financial challenges and want to either survive or sell the firm early to get a good price. This study sought to evaluate the impact of M&As on the financial performance of some selected Ghanaian banks namely GCB, Ecobank, Access and Republic banks. The researcher employed descriptive research design and relied mainly on secondary data. The collection of the secondary data was done with the Disclosure check List. The data was analyzed using eight financial ratios made up of both profitability and solvency ratios. The population of the study was the twenty-three (23) licensed universal banks in Ghana with the sample size of four. The findings of the study established that, M&As generally had positive impact on the financial performance of the four banks especially profitability but however, with GCB Bank Limited, the impact was negative. The researcher suggested these recommendations both to the banks and the banks‟ regulator which is the Bank of Ghana. To the banks, the researcher recommended that; the banks should ensure good corporate governance practices, especially their boards and strict compliance to the internal capital adequacy assessment process (ICAAP) to ensure prudent liquidity management. To the regulator, the researcher recommended that; the central bank or Bank of Ghana should tighten its supervision and monitoring as poor supervision was fingered as one major reason for the collapse of the banks