The Impact of Mergers and Acquisitions on the Profitability of Acquiring Banks

Abstract

This study aims to evaluate the impact of cross-border mergers and acquisitions (M&A) on the profitability of acquiring banks in the ASEAN region. Profitability is measured using three primary indicators: Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The data are derived from the financial statements of acquiring banks that engaged in cross-border M&A activities during the period 2016–2021 and are analyzed on a quarterly basis to obtain a more in-depth understanding of the dynamics of financial performance changes. The analytical methods employed include paired sample t-tests and multiple linear regression. The findings indicate an average decline across all three profitability indicators following the implementation of M&A transactions. However, each indicator exhibits a different level of statistical significance, suggesting that the impact of cross-border M&A on profitability is not homogeneous. These results underscore that the success of post-merger integration is influenced by several factors, including the firm’s ability to realize operational and financial synergies, the optimization of strategic resources acquired from the target entity, and the capacity to adapt to regulatory differences and institutional norms in the host country.