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Abstract
The banking sector is one of the most important instrument of the national development, occupies a unique place in a nation's economy. Economic development of the country is evident through the soundness of the banking system. Deregulation in the financial market, market liberalization, economic reforms have witnessed astounding changes in banking industry leading to incredible competitiveness and technological sophistication leading to a new era in banking. Since then, every bank is relentless in their endeavor to become financial strong and operationally efficient and effective.
The paper evaluates the performance of the selected two banks based on the financial ratios from the perspective of pre and post merger. To analyze the impact of merger paired t-test was applied to the various financial ratios for before and after merger data. Based on the analysis of Indian Overseas Bank data, it can be concluded that Net profit margin, Operating profit margin, Return on capital employed, Return on equity and Debt-Equity ratio, there is significant difference but no significant difference with respect to Gross profit margin. Based on the analysis of HDFC bank data, it can be concluded that Net profit margin, Operating profit margin, Return on capital employed, Return on equity and Debt-Equity ratio, there is no significant difference in these ratios before and after merger. But there is significant difference with respect to Gross profit margin.
Keywords: Pre Merger, Post merger, Banks, Financial Performance.
Introduction
The banking sector is one of the most important instruments of the national development and occupies a unique place in a nation's economy. Economic development of the country is evident through the soundness of the banking system. Deregulation in the financial market, market liberalization, economic reforms have witnessed astounding changes in banking industry leading to incredible competitiveness and technological sophistication leading to a new era in banking. Since then, every bank is relentless in its endeavor to become financial strong and operationally efficient and effective. Indian banks are the dominant financial intermediaries in India and have made good progress during the global financial crisis; it is evident from annual credit growth, profitability and trends in NPAs.
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