ABSTRACT

Business consolidation through mergers and acquisitions has evolved into a global phenomenon aimed at achieving economies of scale and enhanced productivity. The imperative for financial institutions to engage in mergers becomes even more pronounced amidst the escalating competition stemming from globalization. This study delves into the effect of business consolidation on the performance of deposit money banks in Nigeria, utilizing a sample of fifteen (15) banks. The research relies on secondary data sourced from the banks' annual reports and statements of accounts spanning the period 2009 to 2014. The data were subsequently analyzed using the ordinary least squares (OLS) method. The findings reveal that business consolidation, represented by total assets and the financial characteristics of the banks, does not significantly affect the returns on assets and earnings per share of these deposit money banks. However, it does exert a significant impact on the profit after tax of these financial institutions. In light of these results, the study recommends business combination to Deposit Money Banks wishing to significantly increase their profit after tax. Nevertheless, Banks should be wary of the use of business combination as a strategic tool based on its non-significant effect on the return on assets and earnings per share, as revealed by this study.