Mergers and Acquisitions in the Kenyan Banking Industry (Research Proposal Sample)

Mergers and Acquisitions in the Kenyan Banking Industry: A Critical Examination of the Successes, Challenges and Opportunities
Student ID number:
Module Name: Mental Wealth and Applied Research
Module code: 
25th October 2022
TABLE OF CONTENTS
TOC \h \u \z Acronyms PAGEREF _heading=h.1fob9te \h 4SECTION ONE: RESEARCH TOPIC, AIM AND OBJECTIVES PAGEREF _heading=h.3znysh7 \h 51.1 Introduction PAGEREF _heading=h.2et92p0 \h 51.2 Background of the research PAGEREF _heading=h.tyjcwt \h 61.3 Problem statement PAGEREF _heading=h.3dy6vkm \h 61.4 Research Objectives PAGEREF _heading=h.1t3h5sf \h 71.4.1 Research aim PAGEREF _heading=h.4d34og8 \h 71.4.2 Specific objectives PAGEREF _heading=h.2s8eyo1 \h 71.5 The rationale of the study PAGEREF _heading=h.17dp8vu \h 71.6 Benefits of The Study PAGEREF _heading=h.3rdcrjn \h 81.7 Scope of the study PAGEREF _heading=h.26in1rg \h 9SECTION TWO: LITERATURE REVIEW PAGEREF _heading=h.lnxbz9 \h 102.1 Theoretical Review PAGEREF _heading=h.35nkun2 \h 102.1.1 Process Theory PAGEREF _heading=h.1ksv4uv \h 102.1.2 Agency Theory PAGEREF _heading=h.44sinio \h 102.2.3 Institutional view of the firm PAGEREF _heading=h.2jxsxqh \h 112.2.4 Knowledge-based view of the firm PAGEREF _heading=h.z337ya \h 112.2 Empirical Studies PAGEREF _heading=h.3j2qqm3 \h 122.2.1 Factors leading to M&A in the Kenyan Banking sector PAGEREF _heading=h.1y810tw \h 122.2.2 Impact of M&A in the Kenyan Banking sector PAGEREF _heading=h.4i7ojhp \h 132.2.2.1 Positive Impact PAGEREF _heading=h.2xcytpi \h 132.2.2.2 Negative Impacts PAGEREF _heading=h.1ci93xb \h 142.2.3 Challenges affecting M&A in the Kenyan Banking sector PAGEREF _heading=h.3whwml4 \h 152.2.3.1 Transactional challenges PAGEREF _heading=h.2bn6wsx \h 152.2.3.2 Integrational challenges PAGEREF _heading=h.qsh70q \h 162.2.3.3 Cultural challenges PAGEREF _heading=h.3as4poj \h 162.2.3.4 Structural challenge PAGEREF _heading=h.1pxezwc \h 172.2.4 Potential opportunities for M&A in the Kenyan Banking sector PAGEREF _heading=h.49x2ik5 \h 182.3 Synthesis of the literature review PAGEREF _heading=h.2p2csry \h 19SECTION THREE: RESEARCH METHODOLOGY PAGEREF _heading=h.147n2zr \h 203.1 Overview PAGEREF _heading=h.3o7alnk \h 203.2 Research Methodology PAGEREF _heading=h.23ckvvd \h 203.3 Research Philosophy PAGEREF _heading=h.ar5eua6twnss \h 203.4 Research design PAGEREF _heading=h.ihv636 \h 213.5 Data Collection PAGEREF _heading=h.32hioqz \h 223.6 Data Analysis PAGEREF _heading=h.1hmsyys \h 243.7 Validity and Reliability PAGEREF _heading=h.41mghml \h 243.9 Ethical Consideration PAGEREF _heading=h.2grqrue \h 25SECTION FOUR: RESEARCH PLAN PAGEREF _heading=h.vx1227 \h 264.1 Overview PAGEREF _heading=h.3fwokq0 \h 264.2 The Research Schedule PAGEREF _heading=h.1v1yuxt \h 264.3 Relevant Milestone PAGEREF _heading=h.4f1mdlm \h 27APPENDIX PAGEREF _heading=h.unv8k9sp3xk4 \h 28Appendix 1: Mergers and Acquisitions in Kenya (2012 - 2022) PAGEREF _heading=h.ijisusbvwlyf \h 28REFERENCES PAGEREF _heading=h.q9a3xlusxavi \h 30
Acronyms
CBK:Central Bank of Kenya
FSP: Financial Services Providers
KPI: Key Performance Indicator
M&A: Mergers and Acquisitions
Proposed Research Topic
“Mergers and Acquisitions in the Kenyan Banking Industry: A Critical Examination of the Successes, Challenges, and Opportunities.”
SECTION ONE: RESEARCH TOPIC, AIM AND OBJECTIVES
1.1 Introduction
In the current society, trends and patterns are always changing, which means businesses have to change their strategies to keep up with them constantly. The banking industry is no exception to this trend because it has evolved from being predominantly characterized by local banks to significant foreign bank participation (Murgor and Saxunova, 2022; Ombaka and Jagongo, 2018). Some of the major trends in the banking sector include mergers and acquisitions (M&A). According to Kumar (2019), mergers occur when two or more institutions become one company after a buyout, while an acquisition happens when one institution acquires another company's assets. Thus there are shifts from smaller local banks to international banks, as well as mergers among regional and national banking institutions into one large Financial Services Provider (FSP). In addition, the banking sector is made up of commercial banks and cooperative banks. Commercial banks offer their customers a full range of financial services, including retail deposits and lending. Cooperative banks are not-for-profit organizations that focus on lending to low-income households with limited access to credit markets (Safavian and Zia, 2018). The growth in M&A has coincided with increased acquisitions of smaller banks by larger banking/financial institutions and the mergers of regional and national banks into regional and national super-sized Financial Services Providers (Maundu, 2020). The proposed research aims to critically examine M&As in the Kenyan banking industry, looking at the trends and dynamics of these transactions across different sizes of financial institutions and types of FSPs, as well as assessing the KPIs leading to acquisition success or failure.
1.2 Background of the research
Globally, M&A has gained popularity for its ability to grow revenues through synergies created between companies, streamline operations for greater efficiency, enhance customer service and market share, gain control over strategic segments of the economy, and increase shareholder value. Countries such as the United States, the United Kingdom, China, France, and Australia have seen increasing numbers of successful M&As. In addition, international statistics show that mergers are concentrated within industries where size matters, such as finance, pharmaceuticals, and oil (Lenihan, 2018). However, if a merger occurs in industries where size does not matter, then these deals tend to be less complex than those involving industries where size does matter. In finance, most of the largest firms are now heavily involved in M&A activity via direct mergers or acquisitions.
Regionally, in Africa, M&A is currently penetrating Nigeria, South Africa, Kenya, Uganda, and Tanzania (Adeleye et al., 2019). Nonetheless, little scholarly research has been done in Africa on the effects of mergers and acquisitions in the banking industry. However, in Kenya, the banking sector has experienced significant changes in the form of M&A. The Central Bank of Kenya (CBK) reported that M&A in the banking sector was the highest in the last three years, from 2019 to 2021. M&A in Kenya mainly happens among small banks, usually acquiring weaker banks to create bigger financial institutions.
1.3 Problem statement
The Kenyan Banking sector has undergone several M&A in the recent past, some of which were successful and others were unsuccessful. However, despite the significant growth in M&A, the Kenyan banking sector has few scholarly sources regarding M&A successes, challenges and opportunities.
1.4 Research Objectives
1.4.1 Research aim
The main objective of the proposed study is to examine the successes, challenges, and opportunities of M&As within the Kenyan banking sector.
1.4.2 Specific objectives
* To examine the critical factors leading to M&As in Kenya's banking sector;
* To analyze the impacts of M&A on banks in Kenya and stakeholders;
* To identify the challenges that may have hampered certain M&A transactions in Kenya's banking sector; and
* To investigate the potential opportunities concerning M&As within Kenya's banking sector and determine how these opportunities can be harnessed for growth.
1.5 The rationale of the study
The rationale for this study is due to the effect mergers and acquisitions have had on some industries in Kenya. There are few scholarly sources on M&As within banking firms and in Kenya compared to other countries such as Tanzania, South Africa, Nigeria, and Brazil, among others. In addition, there is limited research on how these transactions impact the financial stability of banks and their customers. Besides, there has been increasing merger activity among local commercial banks in Kenya. In addition, the rationale for the study is also to identify the challenges that may have hampered certain M&A transactions in Kenya's banking sector and investigate the potential opportunities concerning M&As within Kenya's banking sector and determine how these opportunities can be harnessed for growth. Besides, consumers will better understand why banks merge with other institutions and the effects such processes may have on banking services. The study will be carried out due to the need for information and data concerning mergers and acquisitions within the Kenyan banking sector. Thus, this study will fill the gap by examining how these transactions affect customers, employees, and shareholders of banks and regulators regarding the successes, challenges, and opportunities.
1.6 Benefits of The Study
The study is expected to be of benefit to banks in Kenya as well as professionals within Kenya's banking sector because it is expected to provide insights on what makes M&As successful or unsuccessful, what kinds of challenges banks might face during this process, how banks can overcome these challenges if they arise, and how successful M&As in Kenya today. The study will also be helpful to policymakers who could use it to understand why mergers occur within Kenya's banking sector and how they could best mitigate any potential adverse effects that may result from such processes. Policymakers, regulators, bankers...