Pre and post-merger impact on financial performance of Malaysian banks / Intan Shairah Yusof

This paper endeavors to examine the pre and post-merger impact on financial performance of
Malaysia’s local banks. To accomplish this objective, the research methods used to compare
pre-post-merger financial performance is comparison and analysis of ratios to compare the
performance of Malaysian banks during the pre-merger period (1999-2002) and post-merger
period (2003-2005). In addition, a comparative study will be carried out to show possible
impact between the pre and post-merge of local banks from the perspective of performance
and profitability. This paper will analyze the impact of merger on banks’ profitability that
measured by liquidity ratio, leverage and shareholder’s wealth. For this analysis, a panel data
regression methodology will be applied to study the performance of these commercial banks
within Malaysian’s local banks. Financial ratios are collected for a total of 5 (five) local
banks covering a period between 1999 and 2006. Based on the result, 4 out of 6 variables are
significant but 2 of it is negative relationship toward profitability during the pre-merger year.
Meanwhile, the results for post-merger have only one significant result of variables toward
profitability and it has a positive relation.