Effects of Corporate Acquisitions on Non-Financial Performance of Commercial Banks in Kenya: A Case of the Acquisition of Giro Bank Ltd by I&M Bank Ltd.
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Date
2020
Authors
Muchoki, Eric Njue
Njuguna, Reuben
Journal Title
Journal ISSN
Volume Title
Publisher
International Academic Journals
Abstract
With increasing competition and the economy
heading towards globalization, the trend on
acquisitions are expected to rise at a much
larger scale with the aim of achieving a
competitive edge in the financial industry in
Kenya. The study aimed at investigating the
implications of acquisitions on non-financial
performance of the acquisition of Giro bank ltd
by I&M Bank Ltd. The study was guided by
specific objectives: to establish the influence of
Synergy effects on non-financial performance
of Giro bank ltd acquisition by I&M Bank Ltd,
to establish the influence of capital base on
non-financial performance of Giro bank ltd
acquisition by I&M Bank Ltd and to determine
the influence of brand effects on non-financial
performance of Giro bank ltd acquisition by
I&M Bank Ltd. The study was guided by the
following theories; resource-based view
theory, dynamic capabilities theory and
signaling theory. This study employed a
descriptive research design and this allowed the
investigator to describe the variables of interest
in terms of their characteristics. The design is
suited and justified for use in this study because
of the variables to be used. The study will focus
on 1030 staffs from I&M Bank Ltd. The study
focused on I&M Bank Ltd 14 branches in
Nairobi. Structured questionnaire was used to
get the primary data. The surveys will be selfadministered through drop and pick later
approach to the respective staffs of I&M bank.
In this study, the researcher used content
validity to find out whether the instruments
responded to research questions. The content
validity of the instrument was determined in
two ways. First the researchers discussed the
items in the instrument with the supervisor, and
randomly reach the staffs. Test-rested method
of testing reliability was used where the pilot
questionnaires were provided twice to the
staffs, with a 7 days’ interval, to permit reliable
testing. The study used Cronbach’s alpha
formula to test reliability, with value of 0.7.
This study used descriptive statistics to analyze
the collected data. The findings show that their
Acquisitions also enabled I&M Bank Ltd to
scale up more efficiently, not just in terms of
efficiency ratio, but also in terms of the banking
operations. Not only do acquisition give bank
more capital to work with when it comes to
lending and investments, but it also provides a
I&M Bank Ltd broader geographic footprint in
which to operate, by leveraging the value of the
brand, banks can more easily add new products
to this line because people were more willing
to try Banks’s new product. The study also
concludes that non-financial performance of
Giro bank ltd acquisition by I&M Bank Ltd
improved due to adoption of strong synergy
effects, capital base, and brand. In order for
fully realize non-financial performance
through mergers, banks need to have Develop
a clear acquisition strategy. Mergers should
have clear policies that clarify on new
organizational brand, Mergers should be
guided by velar policies the articulate on how
expertise, assets and market share are to be
combined, this will lead to the creation of more
opportunities in the market for growth since
and that It is important to determine the key
criteria for identifying potential target firms
(e.g., profit margins, geographic location, or
customer base) merger or acquisition will
improve the bank’s performance for its
shareholders through synergy.
Description
A research article published in International Academic Journal of Economics and Finance
Keywords
acquisition, synergy effects, capital, brand
Citation
Effects of corporate acquisitions on non-financial performance of commercial banks in Kenya: A case of the acquisition of Giro Bank Ltd by I&M Bank Ltd. International Academic Journal of Economics and Finance, 3(6),