Merger and Acquisition and Operational Performance of Selected Deposit Money Banks in Nigeria

Abstract

This study investigates the impact of Revenue Growth (RG), Cost Efficiency Ratio (CER), and Asset Growth (AG) as indicators of merger and acquisition on the financial performance of selected Nigerian banks, measured by Return on Assets (ROA), Return on Equity (ROE), and Return on Capital Employed (ROCE). The study explored selected deposit banks in Nigeria from 2005-2023 using E-views to analyze the data. The results revealed that Revenue Growth (RG) positively influenced ROA with a coefficient of 0.017 (p-value = 0.030), highlighting its significant impact. In contrast, Cost Efficiency Ratio (CER) showed a negative but insignificant relationship with ROA (coefficient = -0.001, p-value = 0.874), and Asset Growth (AG) also negatively impacted ROA (coefficient = -0.016, p-value = 0.048). For ROE, only AG exhibited a negative relationship (coefficient = -0.018, p-value = 0.085). In the ROCE model, CER had a significant positive effect (coefficient = 16.652, p-value < 0.001), while other variables showed limited impact. The study recommended that banks should focus on improving revenue growth by investing in high-yield opportunities, enhance cost management strategies to boost operational efficiency, and optimize asset utilization to improve financial performance.