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Does the Future of the Indian Public Sector Banks lie in Mergers and Acquisitions?

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  • Mallick, Indrajit

Abstract

The future Indian banking industry structure will undergo some basic changes in respect of overall growth capability, risk management potential and competitive pressures. These changes, taken together, will imply an enhanced complexity in the banking industry structure and performance. In the medium and long run the Indian economy is expected to become a Global player with significant presence in World markets and lucrative rural markets. This provides an opportunity as well as a threat for the PSBs. Growth will create flexibility in asset structure, higher capital base and market share and therefore enable PSBs to generate adaptive efficiency. On the other hand, without efficient adaptation to the growth process, the PSBs cannot sustain their competitive edge and asset leverage and therefore will not be able to exploit the opportunities afforded by the domestic and the international market. The optimal strategy will depend on the special historical conditions in the operations of each bank and the comparative advantages and orientation towards future growth, competition and risk. For those banks inclined towards higher growth, organic growth will not be sufficient and has to be replaced by strategies of mergers and acquisitions.

Suggested Citation

  • Mallick, Indrajit, 2004. "Does the Future of the Indian Public Sector Banks lie in Mergers and Acquisitions?," MPRA Paper 32866, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32866
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    References listed on IDEAS

    as
    1. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
    2. Gary A. Dymski, 2002. "The Global Bank Merger Wave: Implications For Developing Countries," The Developing Economies, Institute of Developing Economies, vol. 40(4), pages 435-466, December.
    3. Mallick, Indrajit, 2002. "Comparative advantages in banking and strategic specialization and diversification," MPRA Paper 32605, University Library of Munich, Germany.
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    More about this item

    Keywords

    Keywords: Banks; Mergers; Efficiency;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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