The Impact of M&A on the Nigerian Financial Market: A Pre-Post Analysis

Investment Management and Financial Innovation, 13 (1), pp. 138-150, 2016

23 Pages Posted: 4 Apr 2016 Last revised: 22 Apr 2016

See all articles by Hussein Abdou

Hussein Abdou

The Lancashire School of Business & Enterprise; Department of Management, Faculty of Commerce, Mansoura University

Bunmi Agbeyo

University of Salford

Kirsten Jones

University of Huddersfield

Karim Sorour

University of Northumbria at Newcastle

Date Written: March 29, 2016

Abstract

This paper examines the impact of Mergers and Acquisitions (M&A) on the financial performance of the Nigerian market after consolidation. We use data from all Nigerian banks that survived the consolidation between 2001 and 2009. Logistic regression models are structured to determine the influence of M&A activities on the financial performance of the Nigerian market. Also, we critically evaluate our findings by shedding the light on the lessons other developing nations can learn from the Nigerian market. Our results show that M&A have a positive influence on the financial performance of the Nigerian market. Still, M&A are not enough to achieve the wider objectives of banking sector reform. Towards this end, corporate governance reform must take place vis-à-vis consolidation exercises especially when these M&A are regulatory based rather than market based. Our investigation uses a novel approach by comparing pre- and post-M&A results performance of merged banks as well as comparing these results with non-merged banks. Finally, the paper puts the results in context of the wider reform context and considers the effectiveness of the M&A as a tool for banking sector reform in developing countries. Our investigation offers insights into the policy of banking consolidation which can be useful for policy makers in Nigeria and other similar economies.

Keywords: Nigeria, Mergers and acquisitions (M&A), Financial market, Banking, Financial performance

JEL Classification: G34, G21, N27

Suggested Citation

Abdou, Hussein and Agbeyo, Bunmi and Jones, Kirsten and Sorour, Karim, The Impact of M&A on the Nigerian Financial Market: A Pre-Post Analysis (March 29, 2016). Investment Management and Financial Innovation, 13 (1), pp. 138-150, 2016. Available at SSRN: https://ssrn.com/abstract=2756768

Hussein Abdou (Contact Author)

The Lancashire School of Business & Enterprise ( email )

The Lancashire Law School
Corporation Street
Preston, PR1 2HE
United Kingdom
00441772894700 (Phone)

Department of Management, Faculty of Commerce, Mansoura University ( email )

Mansoura, 35516
Egypt

Bunmi Agbeyo

University of Salford ( email )

University of Salford
M5 4WT Salford, Lancashire M5 4WT
United Kingdom

Kirsten Jones

University of Huddersfield ( email )

Queensgate
Huddersfield HD1 3DH
United Kingdom

Karim Sorour

University of Northumbria at Newcastle ( email )

Pandon Building
208, City Campus East-1
Newcastle-Upon-Tyne, Newcastle NE1 8ST
United Kingdom

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