Increasing Merger in Nepalese Banking Sector

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Abstract
Research have been conducted by scholars worldwide regarding merger potential in banking industry based on developed and emerging market. Notably, research study in this regard has rarely been done in a developing countries like Nepal. The main purpose of this research is to evaluate impact of merger in the Nepalese banking sector and its impact on performance and shareholders wealth. Mergers have been responsible for a number of important structural changes in different sectors. In fact, merger changes business environment for an organisation and overall industry. It is very common in developed market such as USA. However, in Nepal, merger is a new issue especially in banking industry. This research investigates performance of the merged Nepalese banks during the year 2004 to 2013.

Table of Contents
1. Title4
2. Introduction…………………………………………………………………………………………………………………………4
2.1. Statement of Problem….……………………………………………………………………………………….4
2.2. Aim of Research…..……………………………………………………………………………………………….5
2.3. Objective…..………………………………………………………………………………………………………….5 3. Research Questions………………………….………………………………………………………………………………….5 4. Hypothesis of the Study……………………………………………………………………………………………………….5 5. Literature Review…………………………………………………………….………………………………………………….5 6. The research strategy and methodology………………………………………….…………………………………..6 7. Logistical and ethical consideration………………………………………………………………………………………7 8. Proposed Outcomes……………………………………….…………………………………………………………………….7 9. Limitations of proposed study………………………………………………….…………………………………………..7 10. A planned timetable for the various elements of the work………………………………………………….8 11. Bibliography……………………………………………………………………………………………………………………….9

1. Title:
Study of Increasing Merger Trend in Nepalese Banking and Financial Sector and Its Impact on the Banking Performance and Shareholders Wealth. 2. Introduction.
Merger plays a vital role to enable companies to achieve their objectives by strengthening organisation’s financial and market position. By definition it is ‘The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.’ (Investopedia.com, 2013) Economies of scale through volume in operating cost and technology deployment facilitate companies to minimise their cost. Whilst large product suite and cross selling potential empower economies of scope. Optimisation of human resource and financial capital are other significant benefits of merger. All these factors lead to development of a more robust financial system for a bank. 2.1 Statement of the Problem

Globalisation and fast growing competition bring positive influence in Nepalese banking industry. However, to gain competitive advantage and to increase accounting profitability, banks need to develop relevant strategies. Merger strategy thus provides an opportunity for banks to increase their size and market share in order to become more competitive. The main aim of merger is to improve shareholders value. Merges have advantages such as lower costs due to economies of scale, increase in market power, diversification, and reduced operational expenses. But at the same time, there can arise problems such as the interest of promoters and managers in post-merger scenario, reconciliation of share capital and branch, appointment of a new CEO and Board, and human resource structure. Merger and Acquisition have long history in banking sector and are common in the international market. Marks and Mirvis found that global value of bank merger increased from $462bn in 1990 to $4.6 trillion in 2007. (Marks & Mirvis, 2010) In case of Nepal, it has a short history of merger in banking sector, the first merger took place in 2004 when Laxmi bank and HISEF Finance Ltd. merged and started...
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