Mergers & Acquisitions of Banking Institutions and Customer Satisfaction in Rwanda: A Case of KCB Rwanda & BPR

Sindambiwe Amos () and Dr. Osiemo Kengere Athanas ()

International Journal of Finance and Accounting, 2024, vol. 9, issue 5, 54 - 77

Abstract: Purpose: The core aim of this research was to analyse the impact of mergers and acquisitions on consolidated banks’ service quality, by applying modified SERVQUAL model that served as a tool to show the change reflected in the service quality matrix after M&A through service quality demands grouped in dimensions of tangibility, assurance, responsiveness, empathy, employee skills, convenience, reliability, access, and financial aspect in the context of Rwandan banks. Methodology: The target population is composed of 428,000 clients of the two banks at the time of their merger while the sample is 385 clients, number arrived at by using the formula by Mugenda and Mugenda. A descriptive case and explanatory study strategy was utilized as the research sake to define client perception of the quality of service and further aimed to clarify the link between M&A and the quality of service and how it impacts client satisfaction. Findings: The findings from the research revealed that service quality demands are satisfactorily responded in both situations of before and after M&A given that in each situation clients’ expectation is generally met, in the range from 63% to 75% before M&A and 58% to 88% after M&A. The t-tests and ANOVA methods were used to examine the field data gathered with emphasis on statistical significance. The research results then provided the extent of the impact of mergers and acquisitions on the overall quality of service and therefore on clients approval. The analysis shows that M&A exercise allowed the increase of overall clients’ satisfaction from the pre-merger positive overall gap of 0.021 to a post-merger positive gap of 0.135. This positive variation was due to improvement of 8 service quality dimensions in the order of Tangibility for 0.207, Empathy for 0.203, Reliability for 0.194, Assurance for 0.171, Employee Competences for 0.149, Convenience for 0.114, and Financial Aspects and Access for 0.031 each. The decrease of satisfaction was observed only on one quality dimension of Responsiveness for -0.073. For the client satisfaction benefit, the research identified “Promptness” as an area of service quality attributes to improve post-2021 mergers and acquisitions at BPR Bank. Unique Contribution to Theory, Practice and Policy: We recommend that during the exercise of M&A, new banking institutions strive to put in place measures for respecting the promised timing of service delivery.

Keywords: Business Merger; Business Acquisition; Service Quality; Customer Satisfaction (search for similar items in EconPapers)
Date: 2024
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