Mergers and Acquisitions (M&A) are considered to be on the fast track for increasing the size, expanding branch network, and enlarging business operations. The evolution of M&A has been long drawn. In this paper, an attempt has been made to determine the shareholder value addition consequent to merger announcements with respect to the six selected bank mergers during the post-liberalization period, i.e., 1991 to 2005. Suitable statistical tools were employed in the analysis of the data. The effect of merger announcements of the banks on their shareholders’ value was evaluated based on the Abnormal Returns (AR) and cumulative abnormal returns arrived at using Market Model (MM), Market-Adjusted Model (MAM) and Buy and Hold Abnormal Returns (BHAR) model for various event windows. The results of the study indicate that there is a decline in the shareholder wealth when the securities of the select banks are more prone to market risk, while there is an increase in the shareholder wealth when the systematic risks (market risks) of the select public and private sector banks are the same as that of the market (benchmark) portfolio.

The economic reforms have brought about a comprehensive change in the competitive landscape of the Indian banking system, forcing many of the incumbent banks to adopt Mergers & Acquisitions (M&A) with the objective of restructuring themselves to enhance their efficiency, profitability, and competitive strength. In addition, the government has introduced policy initiatives aimed at deregulation and encouragement of mergers with a view to increasing the size, profitability, and financial strength of the Indian banks, thereby enhancing their capability to compete globally. This climate of relaxed merger regulations has fostered an increase in the number of merger deals among the Indian banks.

Bank Management Journal, Indian Banks, Asset Liability Management, Data Filtering, Least Absolute Deviation, Decision-Making Group, Commercial Banks, Ordinary Least Square, Banking Industry, Kenyan Banks, Least Squares Regression, Mutual Fund Industry, Linear Programming, Financial Markets, Capital Required Adequacy Ratio, Public Sector Banks.