Vol. 6, Issue 2, Part F (2024)

Objective: This study explores the influence of mergers on the financial performance of commercial banks in Nepal.
Methodology: Using a descriptive and causal-comparative research approach, the study focuses on six banks that merged by the middle of July 2022, four of which were completed by the middle of July 2018. Analytical methods include regression analysis, Pearson correlation, paired sample t-tests, variance inflation factor (VIF) evaluations, mean, and standard deviation. Financial performance is evaluated through nine key ratios: earnings per share (EPS), net worth per share (NWPS), price-to-earnings (P/E) ratio, cash deposit (CD) ratio, capital adequacy ratio (CAR), non-performing loan (NPL) ratio, return on assets (ROA), return on equity (ROE), and net profit margin (NPM).
Findings: Significant improvements in EPS, NWPS, ROA, and NPM were observed post-merger. Strong positive correlations were found between pre- and post-merger metrics for most financial ratios, excluding the P/E ratio. The mergers had a positive impact on profitability, especially in EPS, ROA, and NPM. However, variables regulated by the Nepal Rastra Bank, such as the CD ratio, CAR, and NPL ratio, did not exhibit any notable alterations following the merger.
Implications: The findings provide valuable insights for bank managers in making strategic merger decisions and selecting suitable partners. Value: This research deepens the understanding of mergers in Nepalese banks, highlighting financial shifts and offering critical insights for decision-making.
Novelty: It offers a novel perspective on the financial impact of mergers in Nepal's banking sector, revealing key performance changes of post-merger.