Impact Of Mergers And Acquisitions On Karnataka-Originated Public Sector Banks: Evidence From Financial Performance And Stability

Abstract

Karnataka has historically been the birthplace of several prominent public sector banks that played a crucial role in India’s financial deepening and regional development. In recent years, these banks underwent large-scale mergers as part of the national banking consolidation drive aimed at improving efficiency, capital strength, and systemic stability. This paper examines the impact of mergers and acquisitions on Karnataka-originated public sector banks—namely State Bank of Mysore, Canara Bank, Syndicate Bank, Vijaya Bank, and Corporation Bank. Using secondary data for the period 2011–2023, the study applies CAMELS framework analysis, Difference-in-Differences (DiD) estimation, and Data Envelopment Analysis (DEA) to compare pre- and post-merger performance. The findings reveal that while short-term profitability declined due to integration costs and NPA recognition, medium-term improvements were observed in capital adequacy, cost efficiency, and financial stability. The study concludes that consolidation strengthened the long-term resilience of Karnataka-originated banks but underscores the importance of governance reforms and post-merger integration strategies.