impact of mergers and acquisition on the …
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IMPACT OF MERGERS AND ACQUISITION ON THE
PERFORMANCE OF ZAMBIAN BANKS – A CASE
STUDY OF ATLAS MARA BANK
By
JACOB MULENGA
STUDENT NUMBER: 004-079
SUPERVISED BY:
N.M.SERENJE
A dissertation submitted in partial fulfillment of the
requirement for the award of a Bachelor of Arts in Banking
and Finance (BBF) Degree by Cavendish University
August 2020.
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ABSTRACT This dissertation sought to examine the impact of mergers and acquisition on the performance of
Zambian banks as the main objective.
Mergers and acquisitions as a form of corporate restructuring are reform strategies recently
adopted to reposition the banking sector.The case organization used in this study is a result of
various acquisitions over the past ten years. The most recent acquisition occurred three years
ago, but this time it is the one that was acquired by its rival organization.The study was
descriptive using both primary and secondary sources.Data was collected using questionnaires.
Variables such as age, education level, gender, level of seniority in the business, number of years
served and knowledge of mergers and acquisitions were examined for a possible significant
relationship to employee job satisfaction.
Proxies of a selected bank such as shareholders fund and profit after tax where used for this
research. The proxies where used to measure the financial efficiency of the bank in both before
and after the merger. The data used for the research where collected from banks annual reports,
newspapers and academic journals. The data collected were analyzed using Excel to provide
statistical data which was used to explain the relationship of the variables which were used for
this study.The findings of this research indicated that mergers and acquisitions is an effective
exercise of ensuring stability and profitability of the banking sector. It was found that
shareholders fund contributed massively to profit after tax of the bank. The study also conclude
that capital adequacy of commercial banks was affected positively by corporate restructuring.
The study also discovered that mergers and acquisitions by firm is influenced by synergy gains..
Mergers have become a common phenomenon in Zambia over the recent past. Studies focusing
on the performance of banks under mergers and acquisitions appear scanty especially in Zambia.
It was in this light that this study aimed to fill the existing knowledge gap by carrying out a study
on the impact f mergers and acquisitions on the performance of Zambian banks.
Key words: Mergers and Acquisition; Capital Adequacy; Consolidation; Profitability;
Shareholders Fund.
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Acknowledgements
Almighty God
First and foremost, I would like to thank Jehovah God for the life and wisdom.
Supervisor
My special thanks and gratitude are also extended to my supervisor Mr.Serenje for his guidance,
invaluable comments and unreserved intellectual assistance in undertaking this study.
Faculty and Research Staff
I am also grateful to faculty members in particular Mr Hikachila, Mrs.Lesa, Mr Lee, Mr.Chola
and Mrs Zyambo for the endless effort rendered in helping me to be a successful graduate.
Family and Friends
I am very much thankful to my mother, Beatrice Ngoi as well as my Uncle, KapiliSimwanza for
all the support during my time of study, also not forgetting my brothers and sisters, nephews and
nieces for the full support rendered in completion of this project.
Lastly, but not the least, I am thankful to all my friends who always wished me success and
helped me whenever I wanted them.
Thank you sincerely!
Jacob Mulenga
August, 2020
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Declaration
I, Jacob Mulenga, do hereby declare that the dissertation submitted is my own work and it has
not been previously submitted for a degree or any other qualification at Cavendish University
Zambia or any other learning institution, and that all sources are acknowledged. The dissertation
is submitted for the award of Bachelor of Arts in Banking and Finance. All sections of text and
results which have been obtained from other sources have been referenced.
.......................................................... ..........................................
STUDENT (Jacob Mulenga) DATE
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Table of Contents ABSTRACT ................................................................................................................................................. 1
Acknowledgements ..................................................................................................................................... 2
Declaration................................................................................................................................................... 3
CHAPTER ONE ......................................................................................................................................... 7
1.0 INTRDUCTION AND BACKGROUND ............................................................................................ 7
1.1 Introduction ........................................................................................................................................... 7
1.2 Background to the study ...................................................................................................................... 7
1.2.1 Background of Atlas Mara Zambia ................................................................................................. 9
1.3 Problem Statement .............................................................................................................................. 10
1.4 Purpose of the study ............................................................................................................................ 10
1.5 Objectives of the Study ....................................................................................................................... 11
1.5.1 General objectives ............................................................................................................................ 11
1.5,2 Specific objectives ............................................................................................................................ 11
1.6 Significance of the Study .................................................................................................................... 11
1.7 Research Questions ............................................................................................................................. 12
1.8 Research Hypothesis ........................................................................................................................... 12
1.9 Scope of the Study ............................................................................................................................... 12
1.10 Outline of Chapters ........................................................................................................................... 12
CHAPTER TWO ...................................................................................................................................... 14
2.0 LITERATURE REVIEW .................................................................................................................. 14
2.1 Introduction ......................................................................................................................................... 14
2.2 Meaning of Merger and Acquisition ................................................................................................. 14
2.2.1 Types of Merger and Acquisition ................................................................................................... 15
2.4 Challenges confronted by bank Mergers and Acquisitions ............................................................. 19
2.5 Mergers and acquisitions Success vs. Failure ................................................................................... 20
2.5.1 Failure: .............................................................................................................................................. 20
2.5.2 Success: ............................................................................................................................................. 21
2.6 Mergers and Acquisitions Theories ................................................................................................... 22
2.6.1 The Value increasing theory ........................................................................................................... 22
2.6.2 Value creation Theories ................................................................................................................... 23
2.6.3 Economies of Scale and Scope......................................................................................................... 23
2.6.4 Theory of Synergy ............................................................................................................................ 24
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2.6.5 Financial Synergy Theory ............................................................................................................... 25
2.6.6 Tax Incentive Hypothesis Theory ................................................................................................... 25
2.6.7 Concentration Theory ..................................................................................................................... 25
2.7 Empirical frameworks ........................................................................................................................ 26
2.8 Research Gaps ..................................................................................................................................... 29
2.9 Research Variables Arising from Literature review ....................................................................... 29
2.10 Conceptual Model ....................................................................................... 30
CHAPTER THREE .................................................................................................................................. 31
3.0 METHODOLOGY AND DESIGN.................................................................................................... 31
3.1 Introduction ......................................................................................................................................... 31
3.2Research approach ............................................................................................................................... 31
3.3 Research strategy ................................................................................................................................ 31
3.4 Sampling Frame .................................................................................................................................. 32
3.5 Sample Size and Sampling Techniques ............................................................................................. 32
3.5.1 Sample size ........................................................................................................................................ 32
3.5.2 Sampling Techniques ....................................................................................................................... 32
3.7 Data Collection Techniques ........................................................................................................ 33
3.8 Data Analysis Methods ............................................................................................................... 34
3.9 Ethical Considerations ........................................................................................................................ 34
3.11 Limitations of the Study ........................................................................................................... 35
CHAPTER FOUR ..................................................................................................................................... 36
DATA PRESENTATION AND ANALYSIS .......................................................................................... 36
4.1 Introduction ......................................................................................................................................... 36
4.2 Presentation of qualitative / quantitative findings ................................................................... 36
Table 4.1: Age Frequency Distribution of Respondents ........................................................................ 37
Table 4.2 Respondent’s knowledge of Mergers and Acquisitions ........................................................ 38
Table 4.3 Distributions of Respondents by Years of Experience .......................................................... 38
Results of structured interviews (Research Questions: Presentation and Interpretation)................. 38
CHAPTER FIVE .............................................................................................................................. 44
5.0 ANALYSIS OF DATA................................................................................................................ 44
5.1 Analysis of Overall Findings ...................................................................................................... 44
5.2 Introduction ................................................................................................................................. 44
5.3 Background characteristics ........................................................................................................ 44
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5.4 Discussion of Statistical Results ................................................................................................. 46
5.5 Summary ...................................................................................................................................... 47
6.0 Conclusion and Recommendation ..................................................................................................... 49
6.1 Introduction ......................................................................................................................................... 49
6.2 Conclusions .......................................................................................................................................... 49
6.3 Limitation of Study ............................................................................................................................. 49
6.4 Recommendations ............................................................................................................................... 50
6.4.1 Recommendation for Future research ........................................................................................... 50
6.4.2 Recommendations for Government Action and merging banks ................................................. 51
References .................................................................................................................................................. 52
APPENDIX A ............................................................................................................................................ 55
APENDIX B ............................................................................................................................................... 57
Work Schedule and Resource Requirement ........................................................................................... 60
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CHAPTER ONE
1.0 INTRDUCTION AND BACKGROUND
1.1 Introduction Mergers and Acquisitions under Section 24 (1) of the Competition and Consumer Protection Act
Number 24 of 2010 of the laws of Zambia are defined as “processes were an enterprise directly
or indirectly acquires or establishes, direct or indirect, control over the whole or part of the
business of another enterprise, or when two or more enterprises mutually agree to adopt
arrangements for common ownership or control over the whole or part of the respective business.
According to Sherman et al (2011) e Mergers and Acquisitions are one of the most efficient
strategies for improving and growing the operations of the business quickly. Mergers and
acquisitions may increase or decrease returns of shareholders involved in the strategy according
to some empirical findings.
Therefore, this chapter mainly contains the introduction and the background to the study, that is,
the impact of mergers and acquisitions on the performance of Zambian banks. It also loos at the
background of Atlas Mara which is the place where the research was conducted. The chapter also
articulates the problem statement which is by providing the social need, knowledge gap, and also
pinpointing the researcher’s intentions. The research objectives and questions are also included
in this chapter as well as the scope, the significance and purpose, and the disposition of the
research study.
1.2 Background to the study
Having a strong banking sector is very important for a country like Zambia as commercial banks
are essential agents that leads to growth of the economy and occupy important positions in a
country’s financial system. Moving funds between surplus and deficit sector of an economy is
done by commercial banks. Efficient allocation of a country’s savings and facilitate
implementation of monetary policies. Banks increases the quantum of investments and national
output. Mergers and acquisition are arguably the most popular strategy among firms who seek to
establish a competitive advantage over their rivals (Kumar & Bansal, 2008).
Due to changes in the operating environment, several licensed institutions, mainly commercial
banks, have had to merge (combine their operations in mutually agreed terms) or one institution
takes over another’s operations (acquisitions). Some of the reasons put forward for mergers and
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acquisitions are: to gain greater market power, gain access to innovative capabilities, thus
reducing the risks associated with the development of a new product or service, maximize
efficiency through economies of scale and scope and finally in some cases, reshape a firm’s
competitive scope (Hitt et al., 2007). Other reasons include a short-term solution to finance
problems that companies face due to information asymmetries (Fluck and Lynch, 1999),
revitalize the company by bringing in Mergers and Acquisitions.
Mergers and acquisitions are one of the most famous inorganic investment strategies used to
grow and expand business operations across the globe. In Zambia, mergers and acquisitions
transactions keep increasing at unstable rate currently. However, during the fourth quarter of
2008, global mergers and acquisitions transactions declined sharply due to the worldwide
economic financial crisis. The other reasons included lower transaction values in the sinking
capital markets, difficulties with financing mergers and acquisitions deals especially large deals
and the fear about the future economic outlook which force acquiring companies to halt their
mergers and acquisitions strategic objectives (KPMG 2009, p.4).
The existing Zambian research studies on mergers and acquisitions concentrates on the
regulatory framework of the statutory body, that is, the CCPC. In addition, there is no study that
has examined the factors which affects the performance of institutions or companies after merger
and acquisition transaction. Hence, in Zambia, mergers and acquisitions raises an important issue
which is the impact of mergers and acquisitions on the returns of the shareholders and if the
performance is still stable.
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Figure 1.0: Trend in the annual Mergers and Acquisitions notifications received in Zambia
Source: CCPC Mergers & Acquisitions Report 2019
Figure 1.1 shows the current notifications of mergers and acquisitions Zambia has received in the
past nine years. Which clearly shows an increase in 2018 to 98 representing an increase of
approximately 36% Notable of contents entries found. On the number of mergers notified in
2017. A slight drop in 2019 to 47 mergers notified in that year representing a 52% decrease from
2018 (Authors’ Analysis 2014 Based on Financial Reuters Database and CCPC Database).
1.2.1 Background of Atlas Mara Zambia
The acquisition of African Banking Corporation limited was first reported by Zambia Daily mail
dated Friday 1st, July, 2016 where reported the completion of the acquisition of Finance Bank
Zambia Ltd and its subsidiaries for USD61 million in cash and 3.3 million Atlas Mara shares
plus a deferred contingent consideration of up to 1.3 million shares, by Atlas Mara Limited
(LON: ATMA) a financial services institution listed on the London Stock Exchange. African
Banking Corporation limited which was trading under the brand name BancABC by Atlas Mara
group, which later led to the acquisition of Finance bank Zambia, and merging the two local
banks to form Atlas Mara Zambia. The bank obtained an approval from the central bank (BOZ)
to operate in Zambia as African Banking Corporation limited, trading as Atlas Mara Zambia.
Atlas Mara is said to have paid USD 60 million in cash and up to 2.6 million in shares that
included Finance Bank Zambia to be combined with Atlas Mara’s Zambian subsidiary African
Banking Corp Zambia Ltd, with proforma-combined assets of around USD 567 million as at
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December 31, 2015. Atlas Mara is also said to be one of the largest banks in terms of branch
footprint in Zambia, with the number of branches increasing to 65 branches from 23 branches, a
total of 176 ATMs and 23 agencies.
1.3 Problem Statement Mergers and acquisitions in recent years in Zambia has attracted much attention mostly because
of heightened interests in what motivates firms to merge if efficiency, profitability and capital
adequacy is affected by mergers and acquisition of the commercial banks.
In recent times, merger and acquisition exercise of commercial banks have become a key
strategy geared towards increasing the profitability of commercial banks. Also in today’s
banking environment corporate restructuring exercise such as: merger and acquisition, takeovers,
amalgamation etc. are said to have increased the capital adequacy of commercial banks and
research has shown that bank failures are mostly caused by factors that range from; liquidity,
insolvency, fraudulent practices, inadequate capital and bad management within the commercial
banks. Merger and acquisition has become a pivotal driver in the profitability of commercial
banks. It has become one of the most powerful features for most commercial banks by improving
their return on asset (ROA) and their return on equity (ROE) respectively. It is therefore
important to explore how impactful mergers and acquisitions can be on the performance of the
banking industry.
Thus this research study was done to fill the knowledge gap by answering the research question,
what is the impact of Mergers and Acquisitions on the overall performance of commercial banks
in Zambia?
1.4 Purpose of the study The purpose of this study will provide clarity on how effective mergers and acquisitions are to
firms. The study will give reasons for firms to engage in mergers and acquisitions and will also.
This paper provides empirical evidence that can support previous theoretical insights and
development. The research will contribute to the analysis on the performance of performance of
Zambian banks. The research will serve as a learning curve for financial and non-financial firms
to improve their performance. The case study will concentrate on the banks performance for pre-
merger and post-merger in order to find out if mergers and acquisition have a positive impact on
the performance and efficiency of the bank.
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1.5 Objectives of the Study
1.5.1 General objectives Main objective is to examine the Impact of Mergers and Acquisition on the performance of
Zambian Banks.
1.5,2 Specific objectives 1. To examine the impacts of mergers and acquisition on commercial bank’s performance.
2. To evaluate the degree of relationship that exists between an increase in shareholders fund and
profit after tax of the commercial banks.
3. To analyze the impact of mergers and acquisition in achieving its synergy.
4. Toinvestigate the impact of mergers and acquisition on the return on asset and return on equity
of commercial banks.
1.6 Significance of the Study The importance of this study was to evaluate merger and acquisition in terms of its impact on the
efficiency of Atlas Mara bank. The study looked at measures on how to increase profitability,
restore solvency and also rebuilding confidence general public and also investors.
The research was explanatory in nature because it explained acquisitions, mergers and their
impact on the banks financial structure.
The research study is aimed at strengthening the financial soundness and stability of Zambian
banks. The investigation of this study would bring about a body of knowledge that will help
decision making process when it comes to issues of mergers and acquisitions in the near future.
Reason for developing this research is aimed at providing information on the merger impact of
Mergers and acquisition on the performance of banks in context to Atlas Mara. It has been
observed that limited studies have been developed with respect to the research context.
The research will have an important contribution to different firms and managerial fields as it
will allow them to understand the importance of mergers and acquisition for enriching the firm’s
performance and gaining competitive advantage in the contemporary business environment. The
future researchers and readers will also gain significant information from this research work
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about the significance of mergers and acquisitions in improving the organizational performance
and productivity in the market.
1.7 Research Questions 1. To what extent does mergers and acquisition have any effect on the performance of Zambian
banks?
2. How effective has corporate restructuring exercise affected the capital adequacy of Zambian
banks?
3. in what ways has mergers and acquisition exercise of banks achieved a synergy?
4. How has merger and acquisition affected commercial banks return on assets and their return
on equity?
1.8 Research Hypothesis Hypothesis 1
H0: There is no positive relationship between increase in shareholders fund and the profit after
tax of Atlas Mara bank.
H1: There exist a positive relationship between increase in shareholders fund and the profit after
tax of atlas Mara bank.
1.9 Scope of the Study This study is a single case study involving Atlas Mara Bank. The research is focused on
investigating the impact of merger and acquisition of commercial banks in Zambia. It will cover
a selected commercial bank in Zambia, which has engaged in one form of corporate restructuring
exercise or the other and then evaluate its performance during and after the exercise. The study
looks at the bank profitability after mergers and acquisitions, it also focuses on the banks
stability. Will look at shareholders fund, profit after tax and corporate restructuring.
1.10 Outline of Chapters This research work is divided into five (6) chapters. Chapter one comprises the background of
the study, statement of the problem, objective of the study, research question, research
hypothesis, significance of the study, the scope of the study. Chapter two consists of the
literature review which will comprise mainly of theoretical, conceptual, and empirical
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framework. Research design and method of data collection will be covered in methodology
which is chapter three. Analysis of data will be done in chapter.
Chapter five will comprise of the analysis of data findings and summary of findings, chapter six
will be the conclusion, recommendations and contribution to knowledge.
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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction This chapter presents a review of literature from books, journals, magazines, previous and
comparative studies, variables arising from the theoretical framework and conceptual framework.
This literature review will help evaluate the will evaluate the area being reviewed and their
significance to commercial banks. This chapter will give examples of some different scenarios of
banks in different countries who exercised corporate restructuring and how has the banks
performed after the exercise will also be reviewed. Challenges faced by the banks will also be
reviewed in this chapter.
This chapter will summarize research variables in mergers and acquisitions, this will be done in
order to find out if mergers and acquisitions have a positive or negative impact on the
performance of commercial banks. Framework for references will be presented.
2.2 Meaning of Merger and Acquisition Mergers and Acquisitions under Section 24 (1) of the Competition and Consumer Protection Act
Number 24 of 2010 of the laws of Zambia are defined as “processes were an enterprise directly
or indirectly acquires or establishes, direct or indirect, control over the whole or part of the
business of another enterprise.
According to Gaughan (2010) mergers and acquisitions are aimed at achieving business growth
and survival. The concept of merger and acquisition is mainly considered as the significant area
responsible for the corporate finances which deal with the purchasing and venturing of the
existing companies with another company for improving the performance of the existing
business.
Mergers and acquisition are considered as an area responsible for corporate finances in dealing
with purchasing and venturing of the existing company with another company for improving the
performance of existing business.
Mergers and acquisitions are aimed at achieving cost efficiency through economies of scale and
to diversify and expand on the range of business activities for improved performance Soludo
(2004.
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According to the study of Cartwright and Cooper (2016), they defined merger as the fusion of
two or more companies in which one company will legally exist and continues to operate in its
original name or adopt a new name.
Firer (2012) defines acquisition as the absorption of one firm by another but the acquiring firm
returns its identity. Acquisition can either be friendly or hostile. A situation where the target is
willing to be acquired is known as friendly merger, where the target firm views an acquisition as
an opportunity to develop into new areas and use the resources offered by the acquirer. When the
target firm is opposed to acquisition it is referred to as hostile merger. Mergers and acquisitions
differ from country to country, this may depend on factors such as state of economic
development of a country and banking sector performance.
According to (Marcia Millon Cornett et al., 2006) reasons for mergers and acquisitions are
revenue enhancements and cost cutting.
2.2.1 Types of Merger and Acquisition Horizontal merger: is a combination of two or more firms falling in a similar type of
production, distribution or area of business.
Examples can be that of case study being discussed Atlas Mara where a merger of the two banks
to form a bigger and a more effective one. Horizontal mergers usually or mostly take place
between competitors of the product or companies with the same target market segments,
production capacity and production lifecycle of similar product. Another example of a horizontal
merger and acquisition in Zambia was the international takeover of Cadbury Schweppes by the
Coca Cola Company in 1998 which meant that Zambia Bottlers Limited took over Cadbury
Schweppes Zambia Limited on the Zambian market.
Companies achieve great success in horizontal mergers or combinations which results in
lucrative market share increment thus impacting the market power of the newly formed company
(Gaughan 2007). Market power of a newly formed company is impacted by mergers and
acquisition or combination that result in market share increment. The increase in the resultant
size of the surviving company and the degree of competitive advantage in the industry in which
the new company operates leads into increased markets share and power.
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Vertical merger: This is a combination of two or more firms involved in different stage of
production but in the same industry, for example, joining of a TV manufacturing (assembling)
company or the joining of a spinning company and a weaving company (I M PANDEY). The
vertical merger may take the form of forward or backward merger. It is forward when combined
with the suppliers of the raw materials, while in the case of a backward integration it combines
with its consumers. An example of a vertical mergers and acquisitions arrangement in Zambia is
the one that occurred in 1998 between Hybrid Poultry Farm (dominant day old chick’s
breeder) and Galunia Holdings Limited (commercial chicken broiler seller). Hybrid Poultry
Farm decided to dispose part of its Mariandale Farm, which specialised in the raising of day old
chicks to Galunia Holdings.
According to Gaughan (2010, p.165) there are a number of reasons why a company seeks to
execute a vertical merger growth strategy. The reasons are as follows:
The company may seek to merge vertically in order to have a reliable supply of
resources. The reliability supply of resources would incorporate characteristics such as
quality resources and Just in Time (JIT) resource supply.
The company acquires a supplier through backward vertical merger to be cost efficient
and having cost advantage over its competitors. This makes the company to have a self-
supply of resources thus eliminating the mark up the acquired company charged above
the cost of the resources.
Vertical mergers reduce the cost of transaction through pre-agreed costs for long term
supply of resources (Perloff et al 1994, p.502). This enhances non-disruption in the
supply of resources that might occur if the company is to source the resources from an
independent supplier. This also improves the forecasting of the costs of the supply of the
resources and reduces the risk re-agreeing of the supply of resources if any changes
occur in the independent supplying company.
Vertical mergers may arise due to the need by the company to be supplied with resources
or products of the best quality. The best quality materials or products are mostly custom
made for the company at cost value. This makes the company to avoid the up-front costs
it may incur if it attempted source from an independent supplier.
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Conglomerate merger/takeover: This is a combination of firms engaged in unrelated lines of
business. A conglomerate merger and acquisition is the case of Zambeef’sPlc acquisition of
Amanita Milling Ltd and Amanita Premier Oils (ZCC Staff Paper No. 291, September 2007).
Conglomerate mergers provide the company with a lot of opportunities one of them being the
entering of new markets or geographical areas. It also increases the number of different products
that a company is able to offer. It is likely for economies of scale or scope to be generated in
conglomerate merger due to the non-existence of the business strategies of the merged
companies.
There are two forms of conglomerate mergers:
Pure conglomerate mergers – this occurs between companies that get together with no
goals or objectives in common
Mixed conglomerate mergers – this form of conglomerate mergers is further broken
down into two i.e. product-line extension and market line extension. Product-line
extension is the form of mixed conglomerate mergers in which a company links up with a
company with a company with related products thus adding up the company’s product
category to product-line. Market line extensions are another type of conglomerate
mergers where companies that produce the same product but operate in different markets
link up.
Conglomerate mergers have an effect on the competition through the creation of market power
that leads to monopolizing the market. According to Marks (2003) conglomerate mergers tend to
erase competition between the acquired company and its rivals as the acquiring company
independently enters the market. This may result into the creation of a big company with a
dominant market power leading to increased market share, competitive cost advantage, and
barriers to entry. A conglomerate merger can also reduce the number of companies operating in
the market and may also gain political power in turn influencing the social and political decision
making bodies.
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2.3 Impact of mergers and acquisitions on the Business Performance of Banks
According to Hannan and Pilloff (2009) who says that merger and acquisitions strategy help
banks to scale up the profits and revenues and gain a larger number of customers in the targeted
markets. Mergers and acquisition help banks to gain access to increased capitals, and the banking
operations get enhanced with the increased money lending and investment opportunities. Mostly
banks involved in the process of mergers and acquisitions significantly improves the banking
infrastructure and acquire skilled and dedicated employee base and strategies that help in
increasing compliance, risk management strategies, and improve the operational performance
with minimizing institutional risks. Mergers and acquisitions also have a positive impact on
customer perceptions occurs as banks get involved in expanding the business operations through
acquisitions of other banks. Banks involve high capital equity ratios and any lag in the business
operations and lack of strategies employed to improve banking compliance with central bank
regulations negatively affect the business operations. Mismatch or risk in the banking cultures
occurred with bank merger that further affect the overall profitability and functionality of both
the banks in merger expansion strategy (Berger et al., 2008).
Vaara and Monin (2010) further explored that target bank's share and capital assets in the
markets are negatively affected by the bank that is being acquired. Further risks are associated
with transferring the assets that are already poorly managed by the acquired bank. In regards to
the impact of merger and acquisition on the performance of banking organizations, Subhashree
and Kannappan (2018) and Johan (2018) have stated that the overall operations of banks can be
enhanced with the adoption of merger and acquisition strategy. The merger and acquisition play
a significant role in the banking sector, as it helps to improve the level of financial gains. It is
analyzed from the study that the main reason behind the mergers and acquisitions in the banking
sector is to enhance the economies of scale. Merger and acquisition are highly beneficial for
banks because with the adoption of mergers and acquisitions, the banks can enhance their level
of growth and development in the market and will be able to minimize the management related
risks and it also reduces the expenses level (Subhashree and Kannappan, 2018; Johan, 2018).
From the perspective of (Ahmed, Manwani and Ahmed, 2018), it has been critically reviewed
that the performance and productivity of banks can be increased with the help of merger and
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acquisition, as the level of competition is reduced for a merging and acquiring banking firms in
the market.
2.4 Challenges confronted by bank Mergers and Acquisitions Bank mergers may face a lot of challenges which might affect the operations and stability of the
bank. Redundancy, lack of open and rich communication is examined in comparison to actual
demand Gomes et al. (2012). In cases of mergers and acquisitions, the pool of people is
increased significantly who are doing the same job that is expensive and raises the cost of the
companies. Along with this, people face difficulties in adjusting with the new business
environment as they have distinct style of working, thinking, norms, cultures and ethical values.
Allahar (2015) who was also in support of the argument evidenced that post-merger companies
face several integration issues as merger and acquisition requires both the companies to integrate
their vision, policy, ethics, mission and culture; processes, key resources and responsibilities; and
crucial resources such as financial and human resources, plant, brand identities, equipment,
inventories and real estate. The integration of all these aspects require highly efficient, skilled
and qualified workforce who understand the needs and expectations of both the companies, and
align each other aims and objectives effectively. Further, the findings suggested a balancing of
two culture successfully is the key challenge faced by companies during mergers and
acquisitions. Cheng and Seeger (2012) also examined culture as a key challenge to merger and
acquisition. Companies having two extreme cultures such as command and control, or localized
responsibility, wherein the senior managers are responsible for designing strategy and tactical
design-making. This may result in significant increase in employee’s turnover and can affect the
revenues and profits of the companies adversely.
Moreover, in a specific context to banks, it has been examined in the today's market-driven
world, mergers and acquisition have become a prominent term as a crucial strategy of expanding
the banking operation in a nation, as well as, cross-border. In this context, Tiwari (2011) has
conducted the quantitative research on examining the issues and challenges confronted on
mergers of banks. A significant implication of the mergers of banks has been noticed on
probability, market share, employment, human motivation and technology. However, mergers of
banks involve several challenges which are significantly confronted by banks. In this relation,
the closer of branch creates losses of jobs, reduces face to face interactions between the
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customers and service providers, the heavy workload on employees and highly techno-savvy
banking operations nature post the merger and acquisition pose significant challenges. The
introduction of a highly innovative portfolio of products among customers also obstructs
customers to take maximum benefits of the banking offering.
2.5 Mergers and acquisitions Success vs. Failure
2.5.1 Failure: Mergers and acquisitions assist businesses in increasing efficiency by lowering economies of
scale, strengthening efficiency of operations functions. Despite the financial expertise available
to enable the viability of business transactions, many of these business ventures fail. Although
mergers and acquisitions are an increasingly popular method of strategic growth, it is highly
risky when it comes to external growth strategy Steger &Kummer (2011). The reasons for these
failure rates have been widely analyzed and investigated, leading to the fundamental reasons for
failure being linked to the fact companies find it easy to buy on paper but in reality struggle to
perform the mergers and acquisitions to the right standard to enable success.
According to (Weber et al., 2014) mergers and acquisitions failures are mostly caused by
Shortcomings in planning, differences in management and organizational culture. Lack of
synergies, poor integration approach, negotiation mistakes and limited knowledge among senior
managers on the issue of mergers and acquisition leads to failure. Other researchers and literature
has suggested that only the shareholders of the acquired company profit. According to
(Cartwright & Schoenberg, 2006), (Weber et al., 2014) this due to the fact that that that the
acquiring company paid above the value of the acquired company. An example is that of share
price of AOL which was declined in the first 24 hours after the acquisition of Time Warner was
announced. It was assumed that the price paid for Time Warner was very high (Swisher, 2000).
Mergers and acquisition failures are mostly because of over-confidence and the ego of the CEO
and senior management (Steger &Kummer, 2008).
Mostly the personal interests of senior management are always with those of stockholders Weber
et al (2014). Personal advantage is seen in the merger by the CEO and his peers, advantages may
include greater empowerment and control of a larger organization, improvement of the social-
management status, and higher salaries and benefits. Management act in their own personal
21
interests rather than that of the shareholders, which is effectively agency costs in practice where
the agent in this case is the management.
Success and failure of mergers and acquisitions strategy is significant as it is an important role
played by the human factor. According to (Stroh et al, 2003) a financially sound deal may prove
to be a disaster if it is not done sensitively with the acquired companies’ employees and their
different corporate cultures.
2.5.2 Success: Mergers and acquisitions success depends on three key areas that needs to be addressed and dealt
by the company in a manner that puts all three areas on high priority. The combination of
knowledge from economics and finance, strategic management and organizational behavior can
bring success to mergers and acquisitions (Weber et al, 2014). Sound business strategies are the
basis to which mergers and acquisitions can attribute factors of their success. According to
(Cartwright 2012) ‘Why mergers fail and how to prevent it’ suggested that mergers and
acquisition outcomes linked closely to the extent to which management is able to integrate
members of organizations and their cultures.
Human factor plays a crucial role in the action of a successful partnership. Thus allowing clear
motives to be enacted throughout the company by incorporating a good organizational strategy
laying out key financial and management goals (Romig, 2009). According to (Langford &
Brown, 2004) mergers and acquisition success is affiliated to planning, execution and external
conditions such as e.g., economy, financial situation, industry, size, etc.
Higher-level management or CEOs have a huge role to play if they want to create success
Hanley (2014). They need to find the right merger or acquisition target and then determine if the
targeted company is truly the right option to pursue in their strategy for growth or “reinvention”.
CEO’s must ignore cosmetic temptations and instead focus and ensure robust due diligence to
reveal the truth which mostly happens to be financial, culture etc. about the partner they are
taking into a marriage for the long haul”. Linking the majority of literature on successful mergers
and acquisitions together Bain & company (2015) have create a model that outlines the route to a
successful mergers and acquisition.
22
2.6 Mergers and Acquisitions Theories There are number of reasons why companies may engage in external business growth strategies.
The main aim of the company engaging in such mergers and acquisitions strategies is to create or
appreciate the value of the returns of the shareholders. Mergers and acquisitions theories are
categorized into value creating, non-value creating and uncertain value creating theories.
Therefore, the following outlines the motives behind the company’s engagement in mergers and
acquisitions
2.6.1 The Value increasing theory According to (Hittet al., 2001) mergers occur broadly because mergers generate synergies
between the acquirer and the target, and synergies, in turn, increase the value of the firm.
Companies in related lines of business will have enough realizable synergies as the merger will
be beneficial for both parties. Advantages are created when economies of scale and speed are
combined with administrative co-ordination (Krummet al., 1998) as cited in the
(GerhadBeneckeet al., 2007). Efficiency may be defined as the ratio of a system’s effective or
useful output i.e. its total output Bwala (2003). Another definition of efficiency is the degree to
which actual output(s) deviate from the optimum given a unit of measures of input. There are
four types of economic efficiency according to Akvein et al (1997) which are listed below.
Productive efficiency: Is defined as the ability of firms to get the highest output from the
least input given current technological constraints.
Transactional efficiency: This recognizes that firms expend resources to protect the
economic returns to their efforts and properly right.
Allocative efficiency: This Concerns the clearance of markets and the achievement of
maximal consumer benefits given a particular production function.
Dynamic efficiency: This Concerns the clearance of markets in a dynamic perspective
through the improvement of existing products and processes and the development of new
products.
According to the research carried by Tripe (2000) on a small sample of seven to fourteen New
Zealand banks he found that five or six merged banks had efficiency gains based on the financial
ratios while another only achieved a slight improvement in operating expenses to average total
23
income as cited in (Gerhard Beneckeet al., 2007). Hence, if we observe a merger deal, efficiency
theory predicts value creation with positive returns to both the acquirer and the target firm.
2.6.2 Value creation Theories Theories with motives that bring value in the returns of the shareholders that includes mergers
and acquisition are known as value creating theory. Value creating theories mainly comprise
synergistic effects brought about by economies of scale and scope, managerial improvement,
increased and sustainable revenue growth and monopolistic market power (Wang 2007, p.17).
An acquiring firm will economically make sense from a merger if its shareholders benefit from
it. There is an economic advantage created when combined value of the merged firm is greater
than the sum of if their separate entities (John O. and A. Acha 2012). Value creation is the extent
to which the return of an investment over a period of time exceeds the cost of capital for that
investment Helene (2009).
2.6.3 Economies of Scale and Scope Most of the mergers and acquisitions aim to reduce the cost of production through economies of
scale. Companies pursue mergers and acquisitions to save production costs by achieving
economies of scale. Expansion is the main reason or motive for a company to engage into
mergers or an acquisition According to Gaughan (2010).
A company can expand faster if it is acquired in the same or different market as compared to the
internal or inorganic expansion strategies. Economies of scale are savings a company attains
from producing products or services in a high volume that are not available to a small company
that’s according to Berk et al (2012, p.653). Economies of scale makes the merged companies to
serve as this reduces the cost of producing the products or services. Economies of scale enhance
cost depreciation in production (Brealey et al 2011, p.795). Companies experiencing economies
of scale tend to produce at the lowest average cost of production. The study further states that
achieving economies of scale through mergers and acquisitions is the fundamental aim of
horizontal mergers even though they are also achieved in conglomerate mergers.
Mergers and acquisition in the same line of business is known as economies of scale which is
achieved by spreading fixed costs over a large volume of production, it can also be through
sharing central services such as office management and accounting, financial control, executive
development and top level management according to (Brealey et al 2011, p.795).
24
Conglomerate and vertical mergers and acquisitions attain economies of scale when company
portfolio increases as a result of the companies that merge coming from different markets or
industries (Van Horne et al 2009). By merging or acquiring a company backwards and forward
the production and distribution cycle, companies find this motive more efficient and effective to
outsource many of its services and various types of production. Furthermore, economies of scale
and scope lead companies into creating value for the company and the shareholders.
In order to achieve the economies of scale and scope and having a larger customer base, the
banking sector needs to execute mergers and acquisition Kaur et al (2010, p.28). Diseconomies
of scale and scope which is as a result of diffusion of managerial, monitoring and communication
inefficiencies should be of important notice (Sudarsanam 2003).
2.6.4 Theory of Synergy Literatures that deals with mergers and acquisition defines synergy as a financial synergy that is
gained through the merging of conglomerates (Chang, 1990); literature in economics states that
synergy feature in the context of economies of scale that lead to cost savings. Synergy is coined
from a Greek word called “synergos” which means working together. Synergy may be defined as
the ability of two or more business units or companies to generate greater value working together
than when they work separately.
Synergy can be expressed this mathematical equation as [2+2=5] and sometimes it can also be
expressed as [1+1=3]. When managers want to embark on mergers and acquisitions project, it is
viewed as a motive for synergy. A combined firm is expected to have increase in performance
above what the two firms are already expected to accomplish as independent firms through gains
in competitive advantage is known as synergy that’s according to Marco (2008). Synergies are
efficiencies that can only be achieved by merging, that is, they are merger specific JrisyMotis
(2007). Synergy takes the form of revenue enhancement and cost savings, operating efficiency is
also a form of synergy.
Operational synergy appears in the form of revenue enhancements and cost reductions that’s
according to Gaughan (2007). When the combination of two companies reduces the cost of
capital financial synergy is achieved.
25
2.6.5 Financial Synergy Theory Financial synergy occurs as a result of the lower costs of internal financing versus external
financing. When firms with different cash flows positions and investment opportunities are
combined, they produce a financial synergy effect and achieve lower cost of capital. Another
consideration is that of tax saving where the two merged firm’s debt capacity is greater than the
sum of their individual capacities before the merger. The financial synergy theory also states that
capital is relocated to the acquired firm and its investment opportunities improve when the cash
flow rate of the acquirer is greater than that of the acquired firm.
2.6.6 Tax Incentive Hypothesis Theory According to Trautwein, (1990), the tax incentive hypothesis of mergers and acquisitions and tax
provision is an important incentive for mergers as it not only affects the decision to merge but
also the way a merger is structured.
A further argument by Trautwein, (1990), which he noticed that different ways of structuring a
merger comes with different tax consequences that includes an opportunity to carry over by the
acquirer the net operating losses and unused tax credits, an opportunity to step up assets or use
their new sales prices as a basis for depreciation, incentive provided by a lower income tax rate
on capital gains than on dividends to retain earnings to acquire other firms and finally the
opportunity for an acquiring firm to deduct from taxable income the interest payments incurred
on acquisitions related indebtness.
2.6.7 Concentration Theory According to (Demirguc-kunt and Levine, 2000) concentration theory is a theory which argues
that economies of scale bring about bank mergers and acquisition so that concentration is based
on bank efficiency. Sathye(2002) defines concentration as a degree of control of economic
activity by large firms.
According to Allen and Gale (2003), concentrated banking systems may also enhance profits and
therefore lower bank fragility.
According to JrisyMotis (2007) each wave is characterized by a concentration of the type of
merger and specific industries. Financial markets competition in which banks operate had been
intensified, which further encouraged consolidation, an example of this is through mergers and
acquisitions.
26
Mergers and acquisition transactions has occurred between banks, but financial conglomerates
involving; banks, insurance companies and securities firms have also been created. Domestic
mergers continue to dominate international mergers. The relatively modest volume of
international mergers could indicate that domestic banking mergers are apparently more
advantageous than international mergers. Individual European economies are rather
heterogeneous, implying that purely domestic banking mergers offer ample opportunities for
asset risk diversification. Domestic mergers will therefore be preferred to international mergers,
with their concomitant cultural and language problems, differences in national regulations, for
instance; deposit insurance systems, taxation differences and country-specific restrictions on
banking activities. This will discourage cross-border consolidation. The strong world-wide
consolidation observed during the past decades is reflected by a sharp fall in the number of
banks, increased concentration, and the increased size of the largest (five) banks, both in absolute
terms and relative to the smaller banks. While the level of concentration in the EU as a whole,
though rising, is still substantially lower than in the U.S., reflecting the limited level of cross-
border consolidation in Europe, the pace at which concentration is progressing is higher in
Europe than in the U.S.
2.7 Empirical frameworks A number of studies have empirically examined whether mergers and acquisition are solutions to
bank problems, and evidence of merger gains are found in some of these studies. A linkage
between bank mergers and acquisitions and profitability Cabral et al., (2002) and Carlettiet al.,
(2002) provided the research foundation. Mergers and acquisitions in the financial system could
impact positively on the efficiency of most banks that’s according to De-Nicolo (2003) and
Caprion (1999).
A recent study about the banking sector reforms and economic growth in Nigeria by Samuel
(2010) using ordinary least square regression techniques found out that interest rate margins,
parallel market premiums, total banking sector credit to the private sector, inflation rate, size of
banking sector capital and cash reserve ratios are one of the most important and leads a very high
proportion of the variation in economic growth in a country like Nigeria. Evidencing that there is
a strong and positive relationship between economic growth and banking sector reforms in
27
countries. A conclusion by Okpanachi (2011) showed an enhanced financial performance leading
to improved financial efficiency of the banks that engaged in Merger.
A descriptive research design and t-test was done by Adegbagu and Olokoyo (2008) to study the
effect of recapitalization on the bank’s performance of some banks. Findings from the study
were bank profitability ratios such as the Yield on Earning Asset (YEA), Return on Equity
(ROE) and Return on Assets (ROA) were significant. This actually implies that there is statistical
indifference between the mean of the pre and post 2004 bank recapitalization.
An examination of the performance of government induced banks consolidation and that of
macro-economic performance in a post consolidation period was done by Somoye (2008). The
findings suggested that banks consolidation may not necessarily be a sufficient tool for financial
system stability and sustainable development. According to (Ezeoha2007) who studied the
structural effects of banking industry consolidation. He noticed that the ongoing banking
industry consolidation is a representation of attempts by the World Bank to solve bank distress
problems issues which leads to failure and also repositioning the industry for global economic
challenges and national challenges.
It is further suggested in the study that operational difficulties being faced by banks before
consolidation are actually external to them and are prevalent in economies of other countries. A
conclusion by the study suggests that consolidation alone cannot be seen as the solution to the
problem of the industry, unless the background, economic difficulties such as the weakness of a
country’s economy, poor state of the infrastructure and lack of public confidence in terms of the
overall economic and financial reforms experienced in different country’s is addressed otherwise
expected benefits of consolidation may be hard to realize. According to a similar study by (Kwan
2002) find out that productivity improvements from the large banks brought about high rate of
economic activities which was due to fact that large banks where formed as a result of mergers
and acquisitions. Mergers and acquisitions play important role in economic growth and has made
substantial benefits for the shareholders according to economic analysis. The majority of studies
comparing pre and post mergers performance found that, the potential efficiency derived from
mergers and acquisitions rarely comes into existence.
28
According to (Yener and David 2004) who find that mergers and acquisitions played an
important role in improving after merger financial performance, which is a stimulus for
efficiency.
A study which examined the efficiency gains from mergers among Indian Banks over the period
1991-1992 , 2004-2005 was done by Gourlay (2006) and found out that mergers led to the
improvement of efficiency for the merging banks as cited in the (Gerhard Beneckeet al., 2007).
Ahmed Badreldin and Christian Kalhoefer (2009) suggested in their findings that mergers and
acquisitions did not result in improved return on equity which later led to another suggestion that
mergers and acquisition involve stakeholders and are much more visible to the general public.
Although these findings by Ahmed Badreldin and Christian Kalhoefer (2009) contradict the
reforms which occurred in the United States in the late 1980s and similar reforms in the
European Union in the early 1990s resulted in increased banking consolidation and also led to
improved bank performance that’s according to (Yeneret al., 2004:5; Focarelliet al., 2002). A
chi-square test was done when testing for hypothesis by Akpan (2007) in which he found that the
policy of consolidation and recapitalization has ensured customers confidence in the Nigerian
banking industry in terms of high profit. Bank consolidation which occurred in Malaysia
facilitated banks expansion and led expansion of the banking sector Uchendu (2005) and Kama
(2007).
An observation by Nwankwo, Odi (2013) suggested that post bank consolidation have a positive
effect on the growth of Nigerian economy, he used a T-test in his observation. In a country like
Nigeria the recent merger wave which had occurred saw key players fail to meet the time frame
which was required to meet the requirements as unreliable. According to Walter and Uche
(2005) mergers and acquisitions made Nigerian banks more efficient this was analyzed using
simple percentage and data was presented with tables. A. Nelson O. Ajayi (2013) concluded
that it is still impossible to clearly state whether mergers and acquisitions in a country like that of
Nigerian banking sector leads to improved financial efficiency.
This is because mergers and acquisitions in the Nigerian banking sector are a continuous scheme.
According to Anjan V. thakor and Arnoud W. A. Boot (2008) mergers and acquisitions could
bring about non-competition in the banking system, concentrating market power in a handful of
very large institutions and could also reduce the supply of funds to small firms, which may cause
29
community banks to be driven out of business and also causing the banks to dual goals of risk
diversification and new sources of funds through cross border expansion.
The process of financial consolidation and banking reforms have not completely achieved their
desired result in improving the banking sector that’s according to Ahmed Badreldin and
Christian Kalhoefer (2009). Elumilade and David depo (2010) illustrated that most studies on
mergers and acquisitions fail to come up with a positive relationship which has to do with merger
activity and gains in either performance or stockholder wealth.
2.8 Research Gaps The popularity of mergers and acquisition is not limited to Zambia only. All over the world the
experience of mergers and acquisition are being propagated. Mergers and acquisition should not
be seen as a universal remedy for strengthening the financial standing of firms, but rather as an
important tool for achieving the organizational objectives of both firms. From the review of
various literatures on mergers and acquisitions there is no generally accepted conclusion as to
whether mergers and acquisitions have either a positive or a negative impact on the performance
of commercial banks. That is why study is undertaken to ascertain if mergers and acquisitions
have a positive or negative impact on commercial bank’s performance using experiences from
Zambia.
2.9 Research Variables Arising from Literature review A variable is any observation that can take different values. There are two types of variables,
independent variables and dependent variables.
Independent Variables: Churchill Jr. et-al (2002) defines independent variables as those
constructs that have an impact on the outcome. In an experimental environment, the researcher
has control over the independent variable.
Dependent Variables: Churchill Jr. et-al (2002) further defines a dependent variable as that
which you measure in the experiment and what is affected during the experiment.
Hence, in this case, the dependent variable is the financial performance of the bank which is the
shareholder fund (SHF) and explanatory variables include profit after tax and gross earnings.
30
2.10 Conceptual Model
31
CHAPTER THREE
3.0 METHODOLOGY AND DESIGN
3.1 Introduction This chapter contains the research methodology which guided the research process. It starts by
looking at the research approach and identify the research in the category. It also contains the
research strategy, research design, target population, sample size and sampling techniques that
will be employed. This chapter further containsdata collection techniques, Data analysis
methods,ethical issues and the limitation of the study.
3.2Research approach There are two main approaches to research, these being deductive approach and inductive
approach. Deductive approach is a study in which a conceptual and theoretical structure is
developed and then tested by empirical observation; thus, particular instances are deduced from
general inferences, (Collis and Hussey, 2009). For this reason, the deductive method is referred
to as moving from the general to particular. Inductive approach is a study in which theory is
developed from observation of empirical reality; thus, general inferences are induced from
particular instances, which is the reverse of the deductive method. According to Collis and
Hussey (2009), inductive approach involves moving from individual observation to statements of
general patterns or laws; it is referred to as moving from the specific to the general.
In order to explore and analyze the varied implications of mergers and acquisitions strategies
with specific reference to the banking industry in Zambia, it is vital to structure the process of
research in accordance with deductive reasoning.
Therefore, in this research study the deductive approach is applied which will involve collecting
specific data of variable that have been identified as being important.
3.3 Research strategy In order to gather information and data about the research problem and achieve the research
objectives; Atlas Mara was used as a case study. In this regard, the researcher carried out an
internal survey using the questionnaire and personal interviews in which data was collected,
assembled and analysed in order to arrive at hypothesis testing.
32
3.4 Sampling Frame According to Collis and Hussey (2009), this is a record of the population from which a sample
can be drawn. However, the targeted population for this study was management staff at Atlas
Mara bank, the bank had a total number of employees of 500 from which the researcher selected
the sample size.
3.5 Sample Size and Sampling Techniques
3.5.1 Sample size As stated earlier on, the total sample size for this study was 50 members of staff representing
10% of the population.
3.5.2 Sampling Techniques This study used both purposive and random sampling. These methods rely on the judgement of
the researcher in selecting the units to be studied, (Lund and Lund, 2010). The motivation for
using purposive sampling is that it enriches data by enabling the person doing a study to
experience a multitude of points of view on an issue being studied (Manning, 2000). In this vein,
the researcher starts with the assumption that context is critical and purposely selects to interview
and/or events to observe, which are expected to provide a rich array of information.
The respondents were chosen based on their ability to furnish the research with rich information
relevant to the research topic.
In this regard, the following sampling techniques were applied in more specific.
Purposive sampling method was applied to select senior management from the bank
Institutions (Atlas Mara).
Random sampling method was implemented to select the project team members who are
employees of the case study bank and end users.
33
3.6 Time horizon
The length of time over which an investment is made or held before it is liquidated. The time
horizon for this research was cross-sectional. This research study had a length of 90 days from
the beginning of April 2020 to end of June 2020. More details are given in table 3.1 below.
April 2020 May 2020 August 2020
Project Research studyThesis submission
- Proposal - Observation
Preparation and - Questionnaire
Submission
3.7 Data Collection Techniques
According to Collis and Hussey (2009), data collection technique is a method for collecting and/
or analysing data. During data collection both primary and secondary data were collected. And
moreover, during the design of the research method, the alternative of two data collection
methods was evaluated; Interviews/questionnaires and desk research (secondary data collection).
Data was collected by myself as a researcher and gathered through case studies, interviews and
questionnaires. Each interviewee was advised of the purpose of the research, the research topic,
the estimated time to conduct the interview and answer the questions.
As mentioned earlier on, this study got primary data that was obtained by carrying out interviews
and distributing questionnaires, data was also collected by observations where appropriate.
Secondary data was obtained through review of literature. Hence, the following are the three
methods of data collection in specific, that were used to collect data for this study;
34
Interview technique: the interview technique is a data collection technique that involves
oral questioning of respondents, either individually or as a group using various degrees of
flexibility.
Questionnaire technique: scheduled, structured interviews (strictly based on
questionnaire) were used to collect data. This technique was used on respondents on
flexible open-minded interview schedules. This assisted to collect relevant and organized
information from respondents.
Observation: It is the gathering of primary data by investigator’s own direct observation
of relevant people, actions and situations without asking from the respondents.The
researcher excel to present the data that was obtained from the bank.
3.8 Data Analysis Methods
The research utilized both qualitative and quantitative data but it is rooted in a quantitative.Data
collected from the present study covers annualreports over 2009to 2019. Computer programmes
such as Excel was also used.
Quantitative secondary data was collected from the internet and bank data sources including:
Atlas Mara annual reports
Qualitative data gathered from this research was recorded and analyzed using tables and charts in
order to gain understanding of the respondent’s experience.
3.9 Ethical Considerations The research study was triangulated and authorized by the university through the research
supervisor and the study was purely academic and all data collected was treated as such.
Secondary data were acknowledged and cited and the researcher did not present other author’s
information as their own.
Consultation and authorization was given.
All participants were informed of the nature of the research study prior to issuing questionnaires
to them.
35
3.11 Limitations of the Study
During the course of this research study and project design, many things affected its timely
completion, and these things included;
Lack of finance.
Refusal to give detailed response to some questions by the bank and its employees.
Due to time factor, only a few members were reached for source of data and information.
The sample was comparatively small, as time period of the study was too short. Another
factor was due to lack of fund and personnel to administer. Therefore, the small sample could
have affected the representativeness of the study.
This paper has some limitations due to the lack of data available on the research topic. Data
was very difficult to find because very few have written about whether bank mergers and
acquisitions are beneficial or not.
The researcher hoped to get responses from the questionnaires in a reasonable period of time
but instead, these were received much later than anticipated.
Due to the corona virus pandemic, the researcher had much difficulties in collecting data due
to the fact that most employees where working from home and the bank had to lessen number
of entrances into the bank.
36
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Introduction This Chapter presents an analysis of all the data gathered by the approach of the methodological
framework discussed in Chapter 3. It presents the research findings in line with the research
questions and the objectives posed in Chapter 1.
The general objective of the study was therefore, to investigate the impact of mergers and
acquisitions on the performance of Zambian banks.
The researcher collected data using the three different techniques:
i. Observation – The researcher used computer applications including excel to come up
with data of the annual report of the bank in order to examine the impact of mergers
and acquisitions on the performance of Zambian banks.
ii. Interviews – The researcher interviewed senior management employees of Atlas
Mara through a zoom and phone calls in order to find out their views about this study.
iii. Questionnaires – The researcher gave questions to the employees of the bank for
them to answer within a week period of time. The response was not that
overwhelming due to the fact that most employees had to work from home because of
the covid19 and hence some respondents took a long period of time to respond to the
questions.
4.2 Presentation of qualitative / quantitative findings
In this study, the age variable was important so as to determine which age group was mostly
appropriate for this research and their level of expertise with respect to this topic.
37
Table 4.1: Age Frequency Distribution of Respondents
Age group Frequency Percent
20 – 30 25 50
31 – 40 19 38
41 – 50 6 12
TOTAL 50 100
Source Field data (2020) The table above shows a summary of the age distribution of the respondents. The majority of the respondents, 50% in the study were in the age group 20-30; 38% of the respondents were in the 31-40 age groups and age group 41-50 comprised 12% of the respondents.
Figure 4.1: Distribution of Respondents by Sex: Source: Field data (2020).
Figure 4.1 besides indicates that out of 50 Respondents, 40% were females and 60% were male. Sex variable was considered to be important to establish the influence of one sex on their interest in this
topic.
60%
40%
Distribution of respondents by sex
Male Female
38
Table 4.2 Respondent’s knowledge of Mergers and Acquisitions Knowledge on M&A Number of employees Percentage
Excellent 10 22
Very good 24 42
Good 10 22
Poor 6 13
Total 50 99
Source Field data (2020)
Table 4.3 Distributions of Respondents by Years of Experience
YEAR OF EXPERIENCE FREQUENCY PERCENTAGE CUMULATIVE PERCENT
1 – 5 4 8 8.0
6 – 10 24 48 74
10 – 14 9 18.0 26.0
15 – 19 9 18.0 92.0
20 + 4 8 100.0
TOTAL 50 100
Source Field data (2020)
Results of structured interviews (Research Questions: Presentation and Interpretation) The following questions were asked to employees of the bank during the course of the research
and the results are represented below.
General objective: To examine the impact of mergers and Acquisitions on the
performance of Zambian banks.
1. The above stated general objective is in line with the respondent response to the question
39
Table 4.4 “Do you think that mergers and acquisition play a crucial role in improving bank
performance in the local and international market”?Below where the majority (52%) of the
respondents indicated that mergers and acquisitions improve the Zambia’s banking sector,
while,28% strongly agree that mergers and acquisitions improve the bank positively and only
14%of the respondents somewhat disagreed.
Answer option Frequency Percent Valid percent Cumulative percent
Strongly agree 14 28 28 28
Agree 26 52 52 80
Somewhat agree 7 14 14 94
Disagree 3 6 6 100
Total 50 100 100
Source Field data (2020)
28
52
146
0
10
20
30
40
50
60
1 2 3 4 5
CHART TITLE
answer option percentage
40
2. To examine the impact of mergers and acquisitionson commercial banks performance.
Table 4.5 “Do you agree, somewhat agree or disagree with the statement that mergers and
acquisitions helps in bringing about innovative ideas that help commercial banks in
improving their performance?The majority (47.8%) of the respondents agreed that mergers
and acquisitions bring about innovative ideas to improve performance of commercial banks.
While 21.7% of the respondents strongly agreed, and 19.6.2% of the respondents somewhat
disagreed, 10.9% disagreed.
Answer option Frequency Percent (%) Valid percentage Cumulative Percentage
Strongly agree 10 20 21.7 21.7
Agree 22 44 47.8 69.5
Somewhat agree 9 18 19.6 89.1
Disagree 5 10 10.9 100
TOTAL 46 92 100
Missing 4 8.0
TOTAL 50 100
Source Field data (2020)
Source: field data 2020
21.7
47.8
19.6
10.9
0
10
20
30
40
50
60
strongly agree agree somewhat agree disagree
41
3. To evaluate the degree of relationship that exists between an increase in shareholders
fund and profit after.
Table 4.6 Do you agree, strongly agree or somewhat disagree that mergers and acquisitions
help the banking sector in maximizing their profit and shareholders revenue in the local
market? The majority (44%) of the respondents agreed with the statement in the question while,
28% of the respondents Strongly agreed, unlike the two respondents (12%) who disagreed and
the other 16% of the respondents Strongly who somewhat disagreed.
Answer option Frequency Percent Valid percentage Cumulative percent
Strongly Agree 14 28 28 28
Agree 22 44 44 72
Somewhat Agree 8 16 16 88
Disagree 6 12 12 100
Total 50 100 100
Source Field data (2020)
Source: field data
Responds to the question showed that 28% strongly agreed to the question as shown in the table
and high number of respondents of 44% agreed, while 16% somewhat disagreed and 12% of the
28%44%
16%
12%
strongly agree agree somewhat agree disagree
respondents disagreed to the question. Thus the views of respondents sh
acquisition help banks in achieving a synergy as shown by high percentage of respondents who
agreed.
4.Assessing the impact of mergers and acquisitions in achieving its synergy
Table 4.7Do you agree, strongly agree or somewhat disagree
acquisition increases the banks size
the table above that out of 50 respondents majority of the respondents strongly agreed (46%)
with the statement in the question while
unlike the two respondents (8.8%) disagreed and the other (12%) strongly somewhat disagreed to
the question.
Answer option Frequency
Strongly agree 17
Agree 23
Somewhat agree 6
Disagree 4
Total 50
Source Field data (2020)
Source field data 2020
strongly agree
42
respondents disagreed to the question. Thus the views of respondents show that mergers and
acquisition help banks in achieving a synergy as shown by high percentage of respondents who
Assessing the impact of mergers and acquisitions in achieving its synergy
Do you agree, strongly agree or somewhat disagree with the fact that mergers and
acquisition increases the banks size, ratings and value when combined?It can be seen from
the table above that out of 50 respondents majority of the respondents strongly agreed (46%)
with the statement in the question while (34%) of respondents strongly agreed to the question,
unlike the two respondents (8.8%) disagreed and the other (12%) strongly somewhat disagreed to
Percent Valid percentage Cumulative percent
34 34 80
46 46 92
12 12 100
8 8
100 100
34, 34%
46, 46%
12, 12%
8, 8%
strongly agree agree somewhat agree disagree
ow that mergers and
acquisition help banks in achieving a synergy as shown by high percentage of respondents who
with the fact that mergers and
It can be seen from
the table above that out of 50 respondents majority of the respondents strongly agreed (46%)
of respondents strongly agreed to the question,
unlike the two respondents (8.8%) disagreed and the other (12%) strongly somewhat disagreed to
Cumulative percent
80
92
100
43
4.8 Presentation of Statistical Analysis
This section of the research is devoted to setting out the results of the statistical analysis.
Moreover, this section was analyzed using Excel to provide and display data which help to
explain the relationships between the variables examined in this study.
BancABC SHF Gross
earnings Profit
after tax Finance
Bank SHF
Gross earnings
Profit after tax
Year PRE MERGER Year PRE MERGER
2009 $20,265.00 $11,767.90 $1,258.00 2009 $41,600.00 $12,450.00 $10,800.00
2010 $13,630.00 $6,878.00 $1,770.00 2010 $19,630.00 $10,199.00 $2,140.00
2011 $15,199.00 $17,663.00 $4,264.00 2011 $30,100.00 $7,000.00 $6,650.00
2012 $29,603.00 $29,601.00 $4,626.00 2012 $39,800.00 $14,800.00 $9,700.00
2013 $22,583.00 $26,595.00 $5,722.00 2013 $26,122.00 $6,618.50 $1,222.00
2014 $24,576.00 $30,233.60 $1,000.00 2014 $42,230.00 $22,230.00 $1,,340.00
2015 $23,941.00 $22,399.00 $1,111.00 2015 $20,941.00 $11,399.00 $1,001.00
2016
2017
Atlas Mara
POST MERGER
2018 $47,551.00 $61,465.00 $1,239.00
2019 $68,831.00 $52,177.00 $9,804.00
44
CHAPTER FIVE
5.0 ANALYSIS OF DATA
5.1 Analysis of Overall Findings
5.2 Introduction
This chapter presents and analyses the overall findings or results of this research. The chapter is
organized as follows: Section 5.3 begins with the analysis of the background traits. While,
section 5.4 presents and analyses the results from statistical data which is the banks’ balance
sheet and also interprets the statistical results.
5.3 Background characteristics
Age is an important variable in determining the various attitudes and values that people hold. In
this study, the age variable was important so as to determine which age group was mostly
appropriate for this research and their level of expertise with respect to this topic. It was found
that the majority of the respondents, who were 50% in the study, were in the age group 20-30,
indicating that, this research study was mostly appropriate and favored by adults who showed
much interest in it as they dominated the response. This information is further supported by
similar findings which were conducted by Slamm (2008) in South Africa.
Work experience
Out of the respondents, 46% have work experience of 6-10 years which clearly indicated that the
majority of the interested respondents had a bit knowledge of the topic because most of them
witnessed merger and acquisition of the bank occur. This finding therefore.
5.3.1 Do you think that mergers and acquisition play a crucial role in improving bank
performance in the local and international market”?
Out of 50 respondents 28% strongly agreed with the question and 52% agreed to the fact that
mergers and acquisitions exercise help the bank in improving the performance locally and
internationally. Other respondents strongly disagreed to the question 14%.hence from the
respondents it can be concluded that mergers and acquisitions help the banks to perform
effectively both locally and internationally.
45
5.3.2 Do you agree, somewhat agree or disagree with the statement that mergers and
acquisitions helps in bringing about innovative ideas that help commercial banks in
improving their performance?
Opinions of respondents clearly showed from the outcome the table that 21% of the respondents
agreed to the question that mergers and acquisition have benefits of bringing innovative ideas to
the banking sector, while 47% agreed to the question. The other two respondents 19.6% strongly
disagreed to the statement and 10.9% disagreed. Thus from the number of respondents shown it
can be summed up to the fact that a high percentage of respondents agreed.
5.3.3Do you agree, strongly agree or somewhat disagree with the fact that mergers and
acquisition increases the banks size, ratings and value when combined?
Responses to the question showed that out of 50 respondents 28% strongly agreed to the question
as shown in the table and high number of respondents of 44% agreed, while 16% somewhat
disagreed and 12% of the respondents disagreed to the question. Thus the views of respondents
show that mergers and acquisition help banks in achieving a synergy as shown by high
percentage of respondents who agreed.
5.3.4Do you agree, strongly agree or somewhat disagree that mergers and acquisitions help
the banking sector in maximizing their profit and shareholders revenue in the local
market?
The findings show the impact of mergers and acquisitions on the profit and shareholders revenue
of the bank. The frequency of respondents show that a total of, of 47.8% of the respondents had
agreed to the question. And looking at other respondents it showed that the percentage of the
disagreed respondents where not to high hence a conclusion is depicted from the table that
mergers and acquisitions has a positive relation which help the banks increase profitability and
revenue.
46
5.4 Discussion of Statistical Results
The primary goal in this section is to present the results of the balance sheet. However, before
getting into results and interpretations, a brief summary of the estimation is presented once again
in table 5.1 on the next page.
Balance sheet
BancABC SHF Gross
earnings Profit
after tax Finance
Bank SHF
Gross earnings
Profit after tax
Year PRE MERGER Year PRE MERGER
2009 $20,265.00 $11,767.90 $1,258.00 2009 $41,600.00 $12,450.00 $10,800.00
2010 $13,630.00 $6,878.00 $1,770.00 2010 $19,630.00 $10,199.00 $2,140.00
2011 $15,199.00 $17,663.00 $4,264.00 2011 $30,100.00 $7,000.00 $6,650.00
2012 $29,603.00 $29,601.00 $4,626.00 2012 $39,800.00 $14,800.00 $9,700.00
2013 $22,583.00 $26,595.00 $5,722.00 2013 $26,122.00 $6,618.50 $1,222.00
2014 $24,576.00 $30,233.60 $1,000.00 2014 $42,230.00 $22,230.00 $1,,340.00
2015 $23,941.00 $22,399.00 $1,111.00 2015 $20,941.00 $11,399.00 $1,001.00
2016
2017
Atlas Mara
POST MERGER
2018 $47,551.00 $61,465.00 $1,239.00
2019 $68,831.00 $52,177.00 $9,804.00
Source: Atlas Mara (2020)
The results show profit after tax moved up from $1,111 million (BancABC) and $1,001
million (FBZ) in 2015 to $9,804.00 million dollars in 2019which is post-merger profit
after tax of Atlas Mara.
The shareholders fund also moved from $23,941 million in 2015 to $68,831 million in
2019 and also showed an increase of $21,280 from 2018 post merger balances.
Gross earnings in the post mergers and acquisition is more than of the pre-mergers and
acquisition showing a positive impact on the performance of mergers and acquisitions.
During the course of two years operations the bank has had an increase in profitability
and shareholders fund, representing a positive impact of mergers and acquisitions.
47
Atlas Mara bank also had a stellar performance of 2020 with a second quarter earnings
surpassing all banks across the industry. The second quarter profit after tax earnings
sprinted to k69.5.
The relationship between independent (profit after tax and Gross earnings) and dependent
variable (shareholders fund) indicates that an increase in shareholders fund will also increase the
profit after tax of the bank showing that there is a strong relationship between the variables
The results above shows that the case of Atlas Mara bank mergers and acquisitions the post-
merger era is more profitable than that of the pre-merger era. This means that the bank was able
to turn around its available capital to create high asset portfolio. Adequate capital was made
available to management.
Empirical findings of the research was that shareholders fund has had a positive influence on
profit after tax of Atlas Mara bank, synergy being the most important reason for mergers and
acquisition by banks. Literature review showed that corporate restructuring positively affected
capital adequacy ratio.
5.4.3 Acceptance or Rejection of Hypotheses
This section of the chapter addresses whether or not the data gathered and analyzed earlier in this
chapter serves to prove or disprove the hypotheses as initially set out in chapter one. They are
discussed briefly below.
H0: There is no positive relationship between increase in shareholders fund and the profit
after tax of Atlas Mara bank.
H1: There exist a positive relationship between increase in shareholders fund and the
profit after tax of atlas Mara bank.
5.5 Summary
This research was embarked upon primarily with the objective of examining the impacts of
mergers and acquisition on the performance Zambian Banks, proxy for analysis used was
shareholders fund and profit after tax.In summary of this chapter it is evident that mergers and
acquisition have a positive impact on the performance of banks (Atlas Mara).
48
Thus, the following chapter provides final conclusions to the study and poses a series of
recommendations for practitioners and academics for areas of further research.
Empirical findings of the research was that shareholders fund has had a positive influence on
profit after tax of Atlas Mara bank, synergy being the most important reason for mergers and
acquisition by banks.Literature review showed that corporate restructuring positively affected
capital adequacy ratio. Substantial gains target company shareholders according to Roberta
Romano (1992:122).
49
6.0 Conclusion and Recommendation
6.1 Introduction This chapter presents and discuses study conclusions, implications and recommendations. The
chapter is organized as follows: section 6.2 represents conclusion and implications of the study
6.2 Conclusions Mergers and acquisitions is used in synergy creation which is defined as the value of the
combined firms.
Bank mergers and acquisitions made financial stability and also increased shareholders
fund efficiency in operations which led to the public to have confidence in the bank.
Shareholders of the bank plays an important role in attracting funds which enhance
liquidity positions.
The answers to the main question where answered which proved that mergers and
acquisitions have a positive impact on the performance of banks as seen through annual
reports. The annual reports indicated that the bank had increase after the merger than
before the merger (pre and post-merger).
Mergers and acquisition has helped in solving insolvency and illiquidity problems which
is observed by the banks.
A countries banking sector can only be efficient if the policy which handles
consolidations in a country is stable.
6.3 Limitation of Study This paper has some limitations due to the lack of data available on the research topic. Data from
2016 and 2017 would be better for all the variables in order to obtain better results. In some
instances, data was available for an earlier period of time than others. Other limitations of the
study are as follows;
During the course of carrying out this research, the researcher encountered some difficulties such
as:
Difficulties where encountered in getting the annual reports of the bank, especially the
pre-merger annual reports due to the fact that these were not uploaded online which
50
resulted in traveling to the bank head office in Lusaka and as such it was time consuming
as they did not allow access into the bank, hence to get the required bank financial
statement at extra cost.
Financial constraints were mostly faced in the course of printing of journals to review literature
6.4 Recommendations Although this research focuses on the impact of mergers and acquisitions on the performance of
Zambian banks, it is impossible to ignore the fact that there are other variables which examine
the performance of banks.
The following are recommendations for consideration:
6.4.1 Recommendation for Future research Impact of mergers and acquisition on the performance of commercial banks in Zambia is a topic
that surely should be critically and effectively looked into. A research of this magnitude may not
cover all the issues that is needed to be discussed, considering limited time and lack of materials.
The following is therefore what the researcher suggested
Future researchers should consider increasing the sample size data and look into mergers
of acquisition of other countries.
Other researchers should consider using regression analysis and data analysis methods
su.ch as ordinary least squares and a chi square etc.
More variables should be considered when analyzing a research of this kind.
Sectors such as the manufacturing and insurance should be taken into consideration by
future researchers in order to broaden the research topic
This research took into consideration only one bank (i.e. Atlas Mara) which happens to
be the only bank which was formed as a result of Mergers and Acquisition out of the
many banks in existence in Zambia. Future researchers should look out for other banks
who plan to merge such as Access bank and first capital bank if the deal goes through.
51
6.4.2 Recommendations for Government Action and merging banks
The consolidated bank in Zambia should think of expanding their branch both in the rural
and urban areas so as to bring banking service delivery nearer to their customers.
Government and the regulatory authorities in the banking sector should impose stringent
laws which must be complied with by Zambian banks in order for the banks to be
conscious on their toes by enforcing checks and balances in their various operating
departments in the system.
The Zambian banks should improve their operation by being more accustomed to the
latest technology in the banking sector, which will also meet up with international
standards and to compete favorably on the international scene.
Incentives that can sustain the Zambian banking sector in expanding their products in
rural areas should be considered by government.
Employee’s protection policy for post-merger should be there. Mergers can only be
successful if done in similar culture, but leads to job cuts, branch closures which should
be taken into serious considerations.
Creating a pool of experts - The participating bank in mergers and acquisition should
focus on creating a pool of experts from the in-house talents to manage the uncertainties
and attain the maximum benefits of mergers and acquisition strategies. For this, the banks
should pull a group of experts from mainly from three key areas of expertise,
encompassing sales and marketing, operations and finance. Depending upon the unique
situation, the bank can take external assistance from valuation experts, accountants and
investment banker
52
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55
APPENDIX A Balance sheet
BancABC SHF Gross
earnings Profit
after tax Finance
Bank SHF
Gross earnings
Profit after tax
Year PRE MERGER Year PRE MERGER
2009 $20,265.00 $11,767.90 $1,258.00 2009 $41,600.00 $12,450.00 $10,800.00
2010 $13,630.00 $6,878.00 $1,770.00 2010 $19,630.00 $10,199.00 $2,140.00
2011 $15,199.00 $17,663.00 $4,264.00 2011 $30,100.00 $7,000.00 $6,650.00
2012 $29,603.00 $29,601.00 $4,626.00 2012 $39,800.00 $14,800.00 $9,700.00
2013 $22,583.00 $26,595.00 $5,722.00 2013 $26,122.00 $6,618.50 $1,222.00
2014 $24,576.00 $30,233.60 $1,000.00 2014 $42,230.00 $22,230.00 $1,,340.00
2015 $29,941.00 $32,399.00 $1,111.00 2015 $20,941.00 $7,399.10 $1,001.00
2016
2017
Atlas Mara
POST MERGER
2018 $47,551.00 $61,465.00 $1,239.00
2019 $68,831.00 $52,177.00 $9,804.00
56
FACULTY OF BUSINESS INFORMATION AND TECHNOLOGY
TITLE: THE IMPACT OF MERGERS AND ACQUISITIONS ON THE PEFORMANCE OF
ZAMBIAN BANKS.
NB: Answer where applicable
Dear Participant,
I am Jacob Mulenga, a final year student of Banking and Finance at Cavendish University
Zambia. I humbly appeal to you for your corporation in this research study. I would like for you
to help me answer the attached questionnaire as this will help during my research. I will be
available for any clarification for any unclear questions that may not be clear during whilst
answering the questionnaires.
The information that will be collected will be treated anonymous and is purely for academic purpose and as such whatever information you give will be kept confidential.
57
APENDIX B Demographic questions
Indicate with circle where appropriate.
1. Gender
a. Male
b. Female
Appendix: Questionnaire
General questions
1. Working Experience
(a) 1-5
(b) 6-10 years
(c) 10-14 years
(d) 20 +
2. Age-group
(a) 20 - 30 years
(b) 31 -40 years
(c) 40 - 50
Specific Questions
3. “Do you think that mergers and acquisition play a crucial role in improving bank performance
in the local and international market”?
a) Strongly agree
b) Agree
c) Somewhat agree
d) Disagree
58
4.Do you agree, somewhat agree or disagree with the statement that mergers and acquisitions
helps in bringing about innovative ideas that help commercial banks in improving their
performance?
(a) Strongly agree
(b) Agree
(c) Somewhat agree
(d) Disagree
5.Do you agree, strongly agree or somewhat disagree that mergers and acquisitions help the
banking sector in maximizing their profit and shareholders revenue in the local market?
(a) Strongly agree
(b) Agree
(c) Somewhat agree
(d) Disagree
6. Do you agree, strongly agree or somewhat disagree with the fact that mergers and acquisition
increases the banks size, ratings and value when combined?
(a) Strongly agree
(b) Agree
(c) Somewhat agree
(d) Disagree
7. Do you agree, strongly agree or disagree that “mergers and acquisition have an impact on
introduction of new service and facilities for the customers in the local and global market”?
(a) Strongly agree
(b) Agree
(c) Somewhat agree
59
(d) Disagree
8. Do you agree, strongly agree or somewhat disagree that mergers and acquisition exercise helps
the bank expand its location in rural and urban areas?
a) Strongly agree
(b) Agree
(c) Somewhat agree
(d) Disagree
9. Are Communication-related challenges the major reason for the failure of mergers and
acquisitions in banking sector?
(a) Strongly agree
(b) Agree
(c) Somewhat agree
(d) Disagree
Appendix 1: Interview Questionnaire
1. In your own understanding what are the reasons of implementing mergers and acquisition
exercise by banks in order improve their performance in the local and international market?
2. Do you think, more and more banks in Zambia are following mergers and acquisition exercise
strategies for advancing their performance? If yes kindly elaborate.
3. Do you feel that mergers and acquisition implementations come with certain challenges? If
yes kindly elaborate the challenges faced.
4. What are the impacts of merger and acquisition strategies on performance of banking industry
in Zambia?
5. How effective enforcement of mergers and acquisition strategies can be ensured in the
Zambian banking sector?
60
Work Schedule and Resource Requirement
Work Schedule
Task Proposed Period
1. Background of the problem of study 8th April - 10th April
2. Literature review & Theoretical framework 13th April - 18th April
3. Sampling plan 1st May - 5th May
4. Data collection (issuing & collection of questionnaires) 10th June -20th June
5. Sorting and Coding of Responses 22nd June - 4th July
6. Data analysis & Final Report 15th July -7thAugust
Budget
ACTIVITY/ ITEM AMOUNT (ZMW)
Transport 400
Airtime 120
Internet costs 400
TOTAL EXPENDITURE K 920