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Relating Cost Efficiency and Profitability of Merged Firms in the Kenyan Financial Services Industry

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dc.contributor.author Ogada, Agnes
dc.contributor.author Achoki, George
dc.contributor.author Njuguna, Amos G.
dc.date.accessioned 2016-12-07T12:09:10Z
dc.date.available 2016-12-07T12:09:10Z
dc.date.issued 2016
dc.identifier.issn 1833-3850
dc.identifier.uri
dc.identifier.uri http://erepo.usiu.ac.ke/11732/3041
dc.description A Journal article by Dr. Amos Njuguna, Associate Professor and Associate Dean in the Chandaria School of Business at USIU-Africa en_US
dc.description.abstract Theory holds that firms merge to benefit from economies of scale, diversification and synergy, which are realized through cost efficiency. Empirical studies on the other hand report mixed findings with regard to the theoretical underpinnings given the changing financial and technological environment. This paper sought to determine the cost efficiency ratios of merged firms in the Kenyan financial services industry and establish the effect that those ratios have on profitability (inferred using the rates of return on assets and equity). Using a mixed research design, pre and post-merger secondary data was collected from 41 firms in the Kenyan financial services industry that had concluded their merger processes by 31 December 2013. Primary data was used to explain the results of the secondary data. Panel data analysis was used to determine the change in the study variables and trends over between 2009 and 2013, event window (pre-merger and post-merger) analysis was used to test the difference in cost efficiency means before and after the merger while regression analysis was used to determine the relationship between cost efficiency and profitability. Results indicate that cost efficiency improved after merger and resulted to the growth in the rate of return on assets and equity, which was attributed to the efficiency in the use of labour, financial resources and managerial effort. en_US
dc.publisher Canadian Center of Science and Education en_US
dc.relation.ispartofseries ;Vol. 11, No. 7; 2016
dc.subject mergers and acquisitions en_US
dc.subject Cost efficiency en_US
dc.subject ROA en_US
dc.subject ROE en_US
dc.subject Financial institutions en_US
dc.title Relating Cost Efficiency and Profitability of Merged Firms in the Kenyan Financial Services Industry en_US
dc.type Article en_US


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