Impact of Mergers and Acquisitions on Financial Performance of Select Public Sector Banks: A Study

Abstract The banking sector plays a pivotal role in the economic development of a nation by facilitating financial intermediation and ensuring efficient allocation of resources. In recent years, mergers and acquisitions (M&A) have emerged as a significant strategy to strengthen the Indian banking system, particularly among public sector banks. This study examines the impact of mergers and acquisitions on the financial performance of selected public sector banks, namely Punjab National Bank, Canara Bank, and Union Bank of India. The analysis is carried out using the CAMEL model, which evaluates performance based on Capital Adequacy, Asset Quality, Management Efficiency, Earnings, and Liquidity. The study is based on secondary data collected from annual reports and covers the period from 2018 to 2021, comparing pre-merger and post-merger performance. The findings reveal that mergers have led to improvements in capital adequacy, asset quality, management efficiency, and liquidity across all selected banks. However, mixed results were observed in profitability, with some banks experiencing short-term declines due to merger-related costs. Overall, the study concludes that mergers and acquisitions have positively contributed to enhancing the financial stability and operational efficiency of public sector banks in India, despite initial integration challenges.