Mergers and Bank Performance: Evidence from The Indian Public Sector ‎Banks

Manash Pratim   Goswami; Prof. Santosh Kumar  Mahapatra

doi:10.14419/4fdg2098

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Authors
- Manash Pratim Goswami Research Scholar, Department of Commerce,‎ Gauhati University, Assam, India https://orcid.org/0009-0008-7380-9026
- Prof. Santosh Kumar Mahapatra Professor, Department of Commerce,‎ Gauhati University, Assam, India https://orcid.org/0000-0001-6385-6509
https://doi.org/10.14419/4fdg2098

Received date: October 30, 2025

Accepted date: December 7, 2025

Published date: December 14, 2025
Bank Merger; Difference-in-Difference Regression; Financial Performance; India; Ratio ‎Analysis
Abstract

The existing literature on bank mergers reveals mixed and inconclusive evidence on merger ‎outcomes, particularly in developing economies. This study examines the impact of the 2020 ‎merger of Indian Public Sector Banks (PSBs), which remained largely underexplored. The ‎study employs a quantitative design with causal-comparative elements, utilising eight years (2016–2024). It applies the "Profit = Spread – Burden" framework to explore the drivers ‎of bank profitability after the mergers. CAMEL-based key performance ratios are also analysed using paired and independent-samples t-tests, and a difference-in-differences regression is employed to isolate merger effects. Findings indicate improved profitability primarily due to ‎increased spreads, alongside gains in capital adequacy and asset quality. Employee productivity rose without significant downsizing, though rising intermediation costs highlight operational challenges. A significant decline in the cost of funds (CF) highlights stronger bargaining power ‎and an improved ability of merged banks to mobilise funds at lower costs. Compared to non-‎merged banks, merger benefits appear moderate, questioning guaranteed scale efficiencies. ‎Thus, with a multi-layered analytical approach, this study provides insights into merger ‎outcomes for policymakers in evaluating the effectiveness of mergers as a reform tool, ‎especially in the Indian banking context.
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Goswami, M. P. . ., & Mahapatra , P. S. K. . (2025). Mergers and Bank Performance: Evidence from The Indian Public Sector ‎Banks. International Journal of Accounting and Economics Studies, 12(8), 456-466. https://doi.org/10.14419/4fdg2098
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Mergers and Bank Performance: Evidence from The Indian Public Sector ‎Banks

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