Effects of mergers and acquisitions on bank performance. A Case study of CBZ Bank.

Abstract

This study aimed to examine the effect of mergers and acquisitions on the financial performance of commercial banks operating in Zimbabwe. This will enable researchers to develop a more informed framework that is usable when assessing the financial performance and sustainability of bank mergers. The study investigated commercial banks operating in Zimbabwe and a quantitative research approach was employed. Primary data was collected from audited annual reports and the obtained data was analyzed using SPSS and Microsoft Excel. The study revealed that bank profitability, solvency, and capital adequacy improved following the merger between CBZ Bank and CBZ Building Society. The study also identified that liquidity deteriorated following the merger. There is therefore need for banks to favourably consider the route of mergers and acquisitions as a survival strategy in the face of the economic challenges being faced in the local economy. This will ensure commercial banks are able to realize their main goal of stimulating economic activity. In addition, the government needs to de-regulate this sector and reduce the regulatory costs associated with mergers and acquisitions.