Business Combination And Financial Performance Of Banks In Nigeria Banking Industry

BUSINESS COMBINATION AND FINANCIAL PERFORMANCE OF BANKS IN NIGERIA BANKING INDUSTRY

ABSTRACT

In this research work titled “Business combinations and financial performance of banks in Nigeria banking industry” the researcher examined the relationship between total asset of Nigerian banks on the return on asset of the bank. The relationship between volume of shares of banks on the return on asset of the banks. The association between earning per share and return on asset of Nigerian banks. And also the relationship between total deposit and return on asset of the banks. The researcher made use of only secondary data from six years annual report and accounts of the two quoted bank (Access bank Plc and Zenith bank Plc) listed on the Nigeria stock exchange were collected and regression analysis was utilized in the data analysis. The researcher found out that there is significant relationship between total asset of Nigerian banks on the return on asset of the bank. there is significant relationship between volume of shares of banks on the return on asset of the banks. It was also discovered by the researcher that there is a significant relationship between earning per share and return on asset of Nigerian banks. This research work equally shows that there is relationship between total deposit and return on asset of the banks. Based on the findings the study affirms that for a bank to survive in the current dispensation it needs to maximize its comparative advantage (strength) by promoting its uniqueness in the areas where it performs best. The decisive factors for competition and profitability in the new era would be the optimization of resources by the emerging mega banks.

TABLE OF CONTENTS

Title page                                                                                 ii

Certification Page                                                                     iii

 Dedication                                                                              iv

Acknowledgment                                                                     v

Abstract                                                                                   vii

Table of contents                                                                     viii

CHAPTER ONE

10. INTRODUCTION                                                      

1.1   Background of study                                                        1

1.2   Statement of problem                                                      4

1.3   Objectives of study                                                           6

1.4   Research Question                                                           4

1.5 Research hypothesis                                                          5

1.6 Significance of study                                                          6

1.7   Scope of the study                                                           7

1.8   Limitation of the study                                                     9     

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1   Comparative Analysis of The Impact of Merger and

Acquisition In Financial Efficiency Of

Bank In Nigeria                                                                        9

2.2   The Impact of Acquisition on Firm Performance:

A Review of Evidence                                                       13

2.3 The Impact of Merger and Acquisition on

Employees, Staff Representatives and their Unions                 16

2.4 The Impact of Merger and Acquisition on Consumers                19

2.5   The Impact of Merger and Acquisition on shareholder     23

2.6   The impact of restructuring and mergers

on working conditions and the industrial relations

climate                                                                             26

2.7      The Role of Employee Representation in

Mergers and Restructuring                                              30

2.8.1 Relationship Between Total Asset And Return On Asset33

2.8.2 Relationship Between Volume of Shares and Return on        

Asset                                                                                39

2.8.3 Relationship Between Earnings Per Share And Return

on Asset                                                                                   44

2.8.4 Relationship Between total deposit and Return on Asset 47

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1      Research Design                                                              51

3.2       Area of Study                                                                  51

3.3      Sources of Data                                                               51

3.4      Population of Study                                                         52

3.5      Sample Size                                                                     52

3.6      Analytical Method/Technique                                          52

3.7      Model specification                                                                  54

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1      Introduction                                                                     59

4.2      Data Presentation                                                            59

4.3      Description Statistics                                                       66

4.4      Correlation Analysis Result                                             68

4.5      Regression Analysis                                                         69

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings                                                                74

5.3 Conclusion                                                                                56

5.3      Recommendations                                                           76

Bibliography                                                                    77

CHAPTER ONE

INTRODUCTION

1.1      Background of the Study  

Firstly, the study of Business combination and financial performance of banks in Nigeria banking industry is introduce as the main thing which business  merger and acquisition rely on a skill or knowledge brought together by the merger to accomplish business. However, Business are beginning to tell the full impact of the recession. To bring out development in companies joining together of merger and acquisition of the study.

Furthermore, techniques and growth is necessary to determine the performance and continual existence of any business organization without growth, a business  hardly attract good management to itself. Hence the use of merger and acquisition as a techniques for growth and survival strategy in a depressed economy like it appears to be on the increase in recent time. This is not surprising nor considering large number of business failures and flop as a recent result or advise of micro and macro economic climate. It indicates that in a large or small scale, that merger and acquisition are necessary.

      In the face of such hostile business climate, actually, some business organization that belongs to the ``wise group’’ started, thinking of how to pull their resource together by the way of the impact of business merger and acquisition as a techniques for growth survival strategy  in a depressed economy. Meanwhile, Business merger and acquisition has played  an important role in the growth and survival of many firms in Europe, United  State of America, and Nigeria. But before venturing into such a gargantuan adventure, financial managers should view it as organization or employers.

1.2      Statement of the Problem

In the high of the confusion and tumults of the modern business environment globally, some firms have flooded up while other only managed to keep a float. It is but interesting to observe that in the midst of such unfavorable business environment, Some enterprises do not merely survive but post super profit. The logical question is what could account for the divergent fortunes  of some firm of identical size and status in the some industry operating in the same economy. Hence not pretending to have all the answers. I make bold to state, that business merger and acquisition has become one of the fashionable surviving strategy for many companies.

   It is therefore, the intension of the study to investigate the effect merger and acquisition on the performance of some selected companies in Nigeria.

1.3 Objective of the study

This research work titled “Business combination and financial performance of banks in Nigeria banking industry” is aimed at:

1.  To examine the relationship between total asset of Nigerian banks on the return on asset of the bank.

2.  To investigate the relationship between volume of shares of banks on the return on asset of the banks.

3.  To ascertain the association between earning per share and return on asset of Nigerian banks.

4.  To Examine the relationship between total deposit and return on asset of the banks.

1.4 Research Questions

Based on the above research objectives, the researcher developed the following research questions

1.  What is the extent of relationship between total asset of Nigerian banks on the return on asset of the bank?

2.  To what extent do volume of shares of banks relate with the return on asset of the banks?

3.  What is the extent of the relationship between earning per share and return on asset of Nigerian banks?

4.  To what extent does total deposit relate with return on asset of the banks?

1.5 Research Hypotheses

The following research hypotheses were developed by the researcher;

Ho: Total asset of Nigerian banks does not have any significant relationship with the return on asset of the banks.

H1: Total asset of Nigerian banks has significant effect on the return on asset of the banks.

Ho: Volume of shares of banks does not have any impact on the return on asset of the banks.

H1: Volume of shares of banks has so many impacts on the return on asset of the banks.

Ho: There is no relationship between earning per share and return on asset of Nigerian banks.

H1: There is significant relationship between earning per share and return on asset of Nigerian banks.

Ho: There is no relationship between bank deposit and return on asset of the banks.

H1: There is significant relationship between bank deposit and return on asset of the banks.

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