and to investigate effect of financial stability on financial performance of

And to investigate effect of financial stability on

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and to investigate effect of financial stability on financial performance of merged commercial banks in Kenya. The study adopted a descriptive research design which focused on determining the relationship between mergers and acquisitions and the financial performance of the commercial banks between 2008 and 2016.The population of the study consisted of financial institutions in Kenya that had either merged or undergone acquisitions from 2000 to 2016 as approved by the Central Bank of Kenya. The sample was selected using the purposive method which involved studying ten commercial banks that had merged between the years 2008 to 2016. Secondary data, three years before and three years after the event was retrieved from audited financial statements, annual reports published by Central Bank of Kenya and the respective bank websites. An analysis of the data was performed through use of the Statistical Package for Social Sciences (SPSS) version 21 software. Descriptive, correlation and regression analysis methods were used to establish the effect of the mergers and acquisitions on financial performance of commercial banks in Kenya. Return on Assets in this study was used to measure asset management of commercial banks in Kenya. The results revealed a positive relationship between return on assets and performance r (24) =.536, p < 0.01 . This meant that return on assets as a determinant of performance of Kenyan commercial banks positively influenced mergers and acquisitions. The more the mergers or acquisition institutions acquire assets, the better they perform. Return on Equity was used to measure the effects of mergers and
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41 acquisitions on shareholder’s equity of commercial banks in Kenya. The findings also revealed a positive relationship between return on equity and performance, r (24) = .041, p<0.05 . This implied that institutions that had either merged or undergone acquisition with higher shareholder’s value also had a higher financial performance and hence, a higher market share. Capital Adequacy Ratio was used to measure the effect of mergers and acquisitions on financial stability of commercial banks in Kenya. There were inconsistent results regarding this variable. Findings showed a significant negative correlation of r (24) =-0.178, p<0.01. Meaning that the higher the capital adequacy ratio the institution has, the lower the lower the financial performance of the institution. 5.3. Discussion 5.3.1. Effect of Asset Management on Financial Performance of Merged Commercial Banks in Kenya Five out of the ten banks under study had a decrease in return on assets after the merger or acquisition event. The banks included CFC Stanbic Bank, Equatorial Commercial Bank, K-Rep Bank, Fina Bank and Ecobank. This could be an indication of failure by management to use its resources efficiently of the sampled banks. Descriptive results also indicated a slight rise in the mean values for return on assets from 1.3188 before merger to 1.3758 after merger. This signified that the companies were able to earn higher profits in relation to their overall resources after the merger or acquisition. Akenga and Olang
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