Economic Efficiency in Corporate Consolidation: A Data-Driven Analysis of Merger of Indian Public Sector Banks

This study examines the financial performance implications of the 2020 merger between Allahabad Bank and Indian Bank, a significant consolidation initiative within India’s public sector banking reforms. Through empirical analysis of pre-merger (2017-2020) and post-merger (2021-2024) data, the research evaluates the effectiveness of this strategic consolidation in addressing systemic challenges such as non-performing assets and operational inefficiencies. Employing paired t-test analysis and financial metrics examination, the study reveals mixed outcomes. While statistical analysis indicates no significant improvement in overall financial performance (p > 0.05), specific indicators demonstrate positive trends, including enhanced earnings per share and substantial reduction in net NPA ratio to 0.43% by March 2024. The consolidated entity showed consistent profit growth post-merger, though a strong inverse Pearson correlation coefficient between pre- and post-merger metrics suggests complex underlying dynamics. These findings contribute to the discourse on public sector bank consolidation in emerging economies, indicating that merger success extends beyond immediate financial metrics. The study concludes that while the merger has achieved certain operational objectives, particularly in asset quality management, the full realisation of anticipated synergies remains an ongoing process requiring continued evaluation within India’s evolving banking landscape.