Abstract

In the wake of continuously changing forces of globalisation and deregulation, the financial sectorentities are increasingly involved in merger and acquisition. The present study attempts to evaluatethe impact of type of merger and acquisition deal (such as geographical dimension i.e., domestic orcross-border; motive, i.e., regulatory or market driven; etc.) on the performanceof financial entitiesin India. Specifically, the model specification enables separation of short, medium and long termeffects. For this purpose, the post-merger and acquisition performance of acquiring firms is regressedon a set of independent variables using random effects panel data regression technique.The analysisreveals that there has been a deterioration of capital, liquidity and asset quality and increase in profits (not robust) and size (long run) of the acquirers. The decline in asset quality puts the financial systemat the risks of financial contagion, calling for effective regulation.

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