Merger and its Impact on Financial Performance of Commercial Banks in Nepal

Abstract

The study entitled merger and its impact on financial performance of commercial banks in Nepal. The purpose of this research is to study the effect of merger on the financial performance of commercial bank when Nepal Rastra Bank introduced a forceful merger bylaws policy in the year of 2011. Three year pre-merge and post-merger financial performance is analysis of three commercial banks which are merged in 2015 AD. This study is based on the descriptive and analytical research design. Performance of commercial banks is measured by different variables such as ROA, ROE, EPS, profit margin, capital adequacy, assets quality, liquidity and debt to equity ratios. Pared sample t-test is used to measure the significant change pre-merger performance and postmerger performance. This study conclude that Returns on Assets, earning per share, profit margin, liquidity increased significantly after the merger of the banks. However return on equity, assets quality, debt to total equity and capital adequacy ratio are decreased after the merger. The assets quality ratios, which is measured by the total nonperforming assets to total loan and advance is decreased after the merger, which show that the performing assets of merged banks. The merged banks able to maintain nonperforming assets atios as refers by Nepal Rastra Bank. FinSimilarly the sampled merged bank able to meet the capital adequacy ratio.