Mergers and Acquisitions and Financial Performance of Commercial Banks in Kenya

Abstract

This research analyzed the impacts of mergers and acquisitions (M&As) on the performance of Kenya's commercial banks. The research aimed to investigate the degree to which synergy realization, merger form, and integration effectiveness shape key performance indicators like return on asset (ROA), return on own equity (ROE), and net interest margin. The research adopted a descriptive and explanatory design using both quantitative and qualitative data. A questionnaire was also systematically filled up by management personnel of respective merged banks, and secondary data was taken from publicly available accounts from 2016 to 2023. Panel regression analysis was utilized for determining the relation of independent variables with financial performance. The findings revealed that synergy realization and integration effectiveness significantly and positively influenced financial performance, while merger type exerted a moderate but significant effect depending on whether the merger was horizontal, vertical, or conglomerate. The study concludes that successful M&As in Kenya’s banking sector depend not only on strategic intent but also on effective post-merger integration and synergy management. The results provide empirical evidence useful for bank executives, regulators, and policymakers seeking to enhance the long-term success of consolidation strategies.