Economic And Core Objectives Of The Central Bank Of Sri Lanka

These bank mergers can generate a great number of advantages. First, the economy of scale is one advantage of the merger. The advantage of the economy of scale is the cost savings associated

Intervention by the central bank is warranted to avoid welfare loss for the institution’s stakeholders since it may be that due to access to supervisory information, the authorities are in a better position to evaluate the financial position of a bank rather than the inter-bank market. The other situation in which the central bank may be the LOLR is when the stability of the entire financial system may be threatened following the failure of a solvent bank. This widespread financial instability may put to risk the ability of the financial system to carry out its primary functions.

A merger or acquisition is a combination of two companies where one corporation is completely absorbed by another corporation. The less essential company loses its identity and becomes part of the more imperative corporation, which retains its identity. A merger extinguishes the merged corporation, and the surviving corporation assumes all the rights, privileges, and liabilities of the merged corporation (Gomes, 2011). A merger is not the same as a consolidation, in which two corporations lose their separate identities and unite to form a completely new

The merger activities have presented upwards or downwards trends and created some specific merger waves. A series of merger waves has been witnessed to in numerous countries. For example, the merger waves of the US, with a worldwide economic impact, have been characterized by five major waves or periods of typical merger activities process (Drogalas et al, 2006).

In this integration two or more entities come together to combine and share their resources to achieve common objectives. According to literature ‘Merger’ is a combination of organizations, where both the merging companies wish to join as one and do so on normally equal terms and which “create an organization where neither party can be seen as acquirer”. In other words it is a collaboration of two or more firms into one, through a purchase acquisition or a pooling of interests.

In recent times, merger and acquisition are considered as one of the important steps for strategic growth. A company can plan to merge or acquire another company if it thinks it is a good investment, or they will earn a sound investment from it. The primary goal of any company entering into merger or acquisition is to boost the shareholder wealth. From a financial perspective, merger is carried due to diversification. It is the process of reducing the risks through investment decisions. For example, many a times, a company is highly at risk since it has done enormous investment in one industry then it can intend to buy a business in another industry (Sky Plc, 1990). This is termed as acquisition and can be beneficial for the host country.

Why companies consider merger to be important for their business success is not far fetch, to increase market share, economies of scale, profit from R&D, benefits on account of tax shields and reduction of competition. However, the merger also has some associated problems such as increased business complexity, clash of corporate culture and sometime employee may be resistance to

Among saving possible failing financial institutions, other goals of this institution includes preventing possible panic from spreading to the populace, preventing possible bank runs from happening also avoiding bankruptcy spreading from one bank to another due to liquidity issues.

Gaughan (2002, 8) argues that “if a horizontal merger causes the combined firm to experience an increase in the market power that will have an anticompetitive effect, the merger may be opposed on antitrust ground”. In addition to market power, the horizontal merger produces ripple effects when two small scale companies join together to gain competitive advantage over the competitor (Ross, 2003, 844-845). This means companies that operate in the same industry for example, Standard Trust Bank merged with United Bank for Africa Plc. and Continental Trust Bank because they share the same resource. Horizontal mergers have been the most important and prevalent form of mergers in

Define the role of the Central Bank and its influence on the market in the national economy.

The central bank is a financial institution that organizes the government’s finances, controls money and credit of the economy and assists as the bank to commercial banks. The roles of the central banks are to create money and develop Monetary Policies. Monetary Policy can be used to give assistance in the way an economy is currently operating in. Monetary

List of abbreviations List of tables Acknowledgements Abstract 1. 2. 3. 4. 5. 6. 7. 8. Introduction Problem statement Objectives and hypothesis of the study Literature review Structure and performance of the financial sector in

The chapter will provide the rationale for banking and its supervision. A brief mention has been made of the high level segmentation of banking, which will be explored further in the next chapters. The chapter ends with the description of typical financial statements in a bank. The description of the terms in a financial statement have been kept to a level suitable for an introductory course.

I thank Allah for guiding me through the phases of compiling this research paper and helping me out in all the difficulties.

Singapore Financial System is one of the world’s largest financial systems. According to Mishkin (2009), Financial System refers to a system that consists of the markets and institutional units that interact for the purpose to provide facilities such as payment and transfer systems and organizing the funds for investment from saved surplus funds to units who have shortage