MODERATING ROLE OF INSTITUTIONAL CHARACTERISTICS ON THE RELATIONSHIP BETWEEN MERGERS & ACQUISITION STRATEGIES AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Abstract

This paper examines the moderating effect of bank size on the relationship between mergers and acquisitions strategies and the financial performance of commercial banks in Kenya. The study population was 30 commercial banks in Kenya that had completed mergers and acquisitions by 2017. The study used secondary data collected. The moderating effect on the relationship between independent and dependent was tested using the stepwise method as suggested by Baron and Kenny 1986. The study findings were that; bank size had a significant positive relationship with the financial performance of commercial banks. The study's conclusion was that; bank size has a moderating effect on the relationship between mergers and acquisitions strategies and the financial performance of commercial banks in Kenya. The study recommends that; regulators create conductive policies to encourage and promote mergers and acquisitions strategies among commercial banks in Kenya. Corporate managers should also consider mergers and acquisitions strategies to enable their organization to enjoy the benefits associated with large-sized firms.

Keywords: Bank Size, Mergers and Acquisitions Strategies, Financial performance, Commercial Banks in Kenya