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A.

TITLE: Financial Efficiency of Merged Banks in India after Globalization Period - Factor Analysis
Approach

B. AUTHORS: N. Bharathi
ABSTRACT: The Indian business environment has altered radically since 1991 with the
changes in the economic policies and introduction of new institutional mechanisms. It has
been observed that such changes have its own impact on the performance both
financially and operationally in the business environment through various measures
including the process of merger and acquisitions. This paper discusses financial efficiency
of merged banks in India after globalization period. It is based on a sample of nine
merged banks and banks drawn from PROWESS database developed by CMIE. The study
indicated that the performance of the banks is facilitated with the help of ratios grouped
into seven factors - both in case of pre and post-merger period of banks. So, the banks
can concentrate their attention by grouping the ratios to improve their performance
further. It is also a fact that the component of ratios in each group is different between
pre and post-merger. Therefore the banks can concentrate their attention on the variable
that helps the growth and act accordingly based on their nature of performance; and it
could be used as a basis for framing policies relating to M&As in service sector and to
identify the areas of improvement for better profitability and performance for the banks.

FINDINGS:

The 9 financial ratios X1, X8, X9, X11, X12, X13, X24, X25, and X30 were grouped
together as factor I and accounts for 23.394 % of the total variance.
The 8 financial ratios X2, X7, X10, X17, X18, X20, X28 and X31 constituted the
factor II and accounts for 22.301 % of the total variance.

DISCUSSION
CONCLUSION: The study indicated that the performance of the banks is facilitated with
the help of ratios grouped into seven factors both in case of pre and post-merger period
of banks. So the banks can concentrate their attention by grouping the ratios to improve
their performance further. It is also a fact that the component of ratios in each group is
different between pre and post-merger. So the banks can concentrate their attention on
the
variable that helps the growth and act accordingly based on their nature of performance.
The new economic environment of the 1990s has facilitated M&As between banks which
facilitated efficient performance. But it can be concluded the improvement in terms of
various parameters can be identified with supported relative information of their own.
The policy makers can use the findings of the study as a base for framing policies relating
to M&As in service sector and to identify the areas of improvement for better profitability
and performance for the banks.
C. REFERENCES:
Pawaskar, Vardhana (2001), Effect of Mergers and Corporate Performance
in India, Vikalpa, Vol. 26 (11), pp. 19-29.
Devraj (2002), Merger and Amalgamations in Banking Industry, Rajat
Publications, New Delhi.
Kaveri, Dr. V. S. (1986), Financial Analysis of Company Merger in India,
NIBM, Himalaya
Publishing House, Delhi.
Reid, Samuel Richardson (1968), Mergers, Managers, and the Economy,
McGraw-Hill Book Company.
Saharay, H.K. (1981), Mergers Amalgamation and Takeovers, Eastern
Law House, Pvt.Ltd.Calcutta.