Pakistan is one of those developing countries in which law and order and security issues are the major problems. Economic conditions are not ideal due to which many firms are doing merger and acquisition to improve their financial performance. Our research study has tried to measure the affect of these merger and acquisitions on the financial performance of the banks in Pakistan. The main objective is to check whether merger and acquisition in banks of Pakistan has increased their performance or not. Merger and acquisition is the independent variable whereas financial performance is the dependent variable. Financial performance is determined through liquidity ratios (DTA, CTA), profitability ratios (ROA, ROE) and solvency ratios (D/E, DR). Data is collected from annual reports of the banks. Only those banks are included which are listed in the Karachi stock exchange in Pakistan. Our results showed that performance of mostly banks increased after merger and acquisition but it is not true for all the banks which reveals that banks should consider more information and detailed analysis should be done before doing merger and acquisition in Pakistan. Results of this research would also help to different stakeholders like researchers, investors, creditors, employees, bankers etc in understanding the importance of merger and acquisitions.
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