Effect Of Volatility And Liquidity On Acquiring Banks: Empirical Evidence From India

Abstract

The paper tries to explore is there any relationship between volatility and liquidity effects on the acquiring bank's performance of acquiring companies. The literature relating to the effect of volatility and liquidity effects is very few. This motivates me to explore whether there is any relationship between acquiring banks short term market performance with volatility and liquidity effects of acquiring banks. The objective of this study to find out the acquiring firm’s volatility and liquidity effect on the Indian context. The paper tries to examine whether any effect in the post-merger performance of acquiring banks in terms of volatility and liquidity effect by using the F test and T-test.  The study has taken the domestic merger of the Indian listed banks for the period from 2001-2012 to analyze the effect on volatility and liquidity effect in the Indian context. The results indicate there is no effect in volatility and liquidity in the Indian context for acquiring banks by comparing from pre-merger announcement to post announcement merger period..