Assessing the impact of mergers and acquisitions in rural banking industry in Ghana: a case of Gomoa Community Bank Limited

Abstract

Merger is where two or more companies decide to combine their activities and to organize a common control of the assets. This study focused on investigating whether mergers are viable options for raising capital for banks to finance their operations, improve their performance and expand their capacity into new areas. The main objective of this study is to assess merger as a financing option to develop the Rural and Community Banking industry, with specific emphasis on the newly merged Gomoa Community Bank Ltd. The study took place among staff of the Gomoa Community Bank (a merger product of three Rural Banks within the Gomoa District in the Central Region of Ghana: Gomoa Rural Bank, Apam; Gomoa Ajumako Rural Bank; Afransi and Eastern Gomoa Assin Rural Bank; Gomoa Dominase). Seventy employees submitted their responses for analysis; 50 males and 20 females. The modal age range was 26-35 years. Majority of the employees were diploma and first degree holders. 54.29% and 51.43% of respondents indicated that, there are no change in advances to Gross Advances and earning asset to total asset ratio respectively. However, 48.58% of the employee stated that the merger led to increase in paid up capital. The main challenges to the merger were fear of staff retrenchment, membership of the board and appointment of General Manager. Based on the responses received, it became evident that the quality of human resource at Gomoa Community Bank Ltd has improved. Recommendations: A holistic involvement of stakeholders through education. Gomoa Community Bank Ltd. is to put in place proper policies and strategies to ensure proper external, internal control and regulatory compliance in order to stay in business.