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Merger and Acquisition Announcement of Indian Banking Sector: A Pre-Post Analysis of Stock Market Reaction


  • Mahesh Dahal
  • Joy Das


With the recommendation of the Narasimham Committee (1991), the Indian banking sector saw a soar in M&A with the objective of value creation, but the existing literature does not provide any conclusive evidence in respect of value creation for shareholders. Therefore, in the present study, an attempt has been made to investigate whether the M&A announcement generates value to the shareholders or not. By employing event study methodology, the study observed significant negative abnormal returns during the post-M&A announcement period for both overall market and individual banking sector stock. The returns further deteriorated in the long run with significant negative BHAR. Thus, the study concludes that the M&A did not create value to the shareholders; instead, it deteriorate the shareholders’ value.

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  • Mahesh Dahal & Joy Das, 2022. "Merger and Acquisition Announcement of Indian Banking Sector: A Pre-Post Analysis of Stock Market Reaction," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 14(2), pages 89-105, December.
  • Handle: RePEc:rfb:journl:v:14:y:2022:i:2:p:89-105

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    References listed on IDEAS

    1. C. N. V. Krishnan & Vasiliy Yakimenko, 2022. "Market Misreaction? Leverage and Mergers and Acquisitions," JRFM, MDPI, vol. 15(3), pages 1-21, March.
    2. repec:eme:mrn000:01409170910927604 is not listed on IDEAS
    3. Asimakopoulos, Ioannis & Athanasoglou, Panayiotis P., 2013. "Revisiting the merger and acquisition performance of European banks," International Review of Financial Analysis, Elsevier, vol. 29(C), pages 237-249.
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    5. Godfred Amewu & Paul Alagidede, 2018. "Do mergers and acquisitions announcements create value for acquirer shareholders in Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 23(4), pages 606-627, October.
    6. Yılmaz, Işıl Sevilay & Tanyeri, Başak, 2016. "Global Merger and Acquisition (M&A) activity: 1992–2011," Finance Research Letters, Elsevier, vol. 17(C), pages 110-117.
    7. Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
    8. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
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    10. Dharen Kumar Pandey & Vineeta Kumari, 2020. "Effects of merger and acquisition announcements on stock returns: an empirical study of banks listed on NSE & NYSE," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 12(1), pages 49-62, June.
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