Impact of Mergers on Indian Banking Sector A Case Study of State Bank of India

Abstract

newline In this modern age, a strong banking system is among the most important factor for a nation s economic growth and its development. Banking sector has facilitated in mobilization of savings which resulted in investments and capital formation. It acts as a bridge between the people who have surplus funds and the people who require funds by accepting deposits and providing loans to the customers who require the funds, in doing so it somehow bridges the gap between rich and poor and maintains equality in the society. newlineThis study has analyzed the impact of merger on stock prices of SBI, using Event Study Methodology. The stock prices are examined, one year before and after merger using SPSS. In this research, the effect of merger on profitability is assessed using spread and burden ratio by applying paired sample t-test for the Period of eight years, four years before and four years after merger. For the purpose of study, impact on productivity is measured using different ratios on the basis of Per branch and Per Branch. This thesis also assessed the risk factor using CAMEL model. For measuring risk, various ratios representing five parameters, capital adequacy, asset quality, management efficiency, earnings capability and liquidity have been examined for 4 years before and 4 years after the merger by applying paired sample t-test using SPSS for the Period covering from 2013-14 to 2020-2021. This research also depicted the trend of all the ratios used for the study from the 2009-10 to 2020-21.