ASSESSING THE FINANCIAL IMPACT OF MERGERS AND ACQUISITIONS IN THE INDIAN BANKING SECTOR: A POST-LIBERALIZATION ANALYSIS

Abstract

Mergers and acquisitions (M&A) have emerged as strategic tools for strengthening financial stability, improving liquidity, and enhancing profitability in the Indian banking sector. This study evaluates the financial impact of M&A on selected Indian banks post-liberalization. Using key financial indicators such as liquidity ratios, profitability margins, and capital adequacy ratios, the study examines pre- and post-merger performance to assess the effectiveness of these strategic consolidations. The findings reveal that M&A significantly improved the liquidity position of merged banks, ensuring better cash flow management and enhanced resource utilization. While the financial stability of merged banks improved notably, the impact on profitability exhibited mixed outcomes, with some institutions experiencing short-term challenges before stabilizing in the long run. The research also highlights that improved operational efficiencies, cost synergies, and expanded customer outreach contributed to positive financial outcomes. However, the study emphasizes the importance of effective integration strategies, including workforce alignment and cultural adaptation, to maximize the benefits of M&A. Overall, the study concludes that M&A are critical for ensuring the sustained growth and competitiveness of Indian banks in an evolving financial landscape. The findings offer valuable insights for policymakers, banking professionals, and financial institutions aiming to leverage M&A strategies for strategic growth and stability.