Viability of Acquisition as a Panacea for Banks’ Dwindling Profits in Nigeria
Abstract
No literature directly reports on the effect of acquisition on the performance of firms in the Nigerian banking sector. All the studies consider mergers and acquisitions in tandem, and none in isolation. This research bridges this gap and studies the effect of acquisition on banks’ profitability. This study aimed to examine the feasibility or inexpediency of acquiring banking firms instead of mergers in the Nigerian banking industry as a growth strategy. The sources of data were from the various financial statements of sample banks obtained via the Internet from the Annual Reports of the Central Bank of Nigeria. The collected data analysis used graphical line charts of statistical correlation and t-tests to compare and analyze the necessary banks’ data relative to their performance and to test this study's hypotheses. Correlation analysis results show that acquisitions have no significant effect on bank profitability in Nigeria, with a minor impact of increased shareholders’ funds after acquiring on the performance of banking firms in Nigeria. The authors hope to contribute to the informed acumen and knowledge base of businessmen, related businesses, financial consultants, and the literature and serve as a good base for further research.
Keywords: acquisition, merger, banks, performance, profitability.
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