A comparative study of efficiency and capital performance on Indonesian bankings after mergers and acquisition

Utama, Vianny (2019) A comparative study of efficiency and capital performance on Indonesian bankings after mergers and acquisition. Bachelor thesis, Universitas Pelita Harapan.

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Abstract

Banks acts as the heart of the economy. As an enormous change of bank functions, Bank Indonesia (BI) encourages the bank to conduct mergers and acquisitions to maintain its existence. However, mergers and acquisitions practice not always leads to desired results. The purpose of this study is to examine the performance of the bank after mergers and acquisitions conducted which emphasis on efficiency and capital performance parameters. Ten Indonesian banking companies were selected as samples using purposive sampling method. The comparative analysis of financial performance pre- and post- mergers and acquisitions were carried out using parametric statistic tools of paired t-test to examine whether mergers and acquisitions lead to the improvement of performance. The results of the study show the performance of efficiency is decreasing insignificantly in the post- mergers and acquisitions period. The capital performance was significantly increased in the post mergers and acquisitions. The implications of the study are that the government and bankers should consider mergers and acquisitions as one strategic business expansion in order to increase capital but also needs to consider the impact of the efficiency in the post mergers and acquisitions period. In addition to the findings, the study recommends bankers to consider the compatibility of management practice of targeted companies to avoid inefficiency.

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