Introduction

The banking industry is one of the most important tools for national growth and has a special
place in the economy of every country. The country's economic growth can be seen in how well
the banking system works. The banking industry has changed a lot because of deregulation in the
financial market, market liberalization, and economic reforms. These changes have made the
industry more competitive and advanced technologically, ushering in a new era of banking. Since
then, every bank has been working hard to become financially stable and run their businesses
more efficiently and effectively. Bangladeshi banks are the main financial institutions in
Bangladesh. They did well during the global financial crisis, as shown by their yearly credit
growth, profitability, and trends in non-performing loans (NPAs). Companies can grow in two
ways: naturally or through outside sources. If a company grows through its own business
activities, using money from one year to grow the next, this is called organic growth, which is
also called internal growth. This kind of progress takes a few years to happen, but companies
want to grow more quickly. Inorganic growth is also known as external growth, and it is thought
to be the fastest and best way to grow. When a company grows by merging with or buying
another business, this is called inorganic growth. The main reason for merging is to create
synergy, which means that "one plus one" is greater than "two." This is used to trick companies
into merging when times are tough. Companies can get a bigger part of the market and lower
costs by merging or buying other companies. Banks are using mergers and acquisitions to get
bigger, get a bigger part of the market, grow faster, and become more competitive through
economies of scale. This helps them run their businesses better and cut costs at the same time.
Need of merger in banking industry of Bangladesh

There have been more mergers and acquisitions (M&As) in Bangladeshi banks recently, as there

have been in many others. Even though merging trends may be the same in other places, it's

important to look at Bangladesh's unique needs and situation:

• Mergers and Efficiency: A fragmented banking scene with many small banks can hurt

competition and general efficiency, just like it did in Bangladesh. Through economies of scale,

mergers and acquisitions can make institutions bigger and stronger, which can lead to higher

profits, more people using technology, and better service delivery.

• Capital Adequacy and Regulatory Compliance: Smaller banks have trouble keeping up with

rising capital adequacy requirements caused by changes in regulations. Mergers and acquisitions

give them access to cash and resources that help them follow the rules, which protects their

finances and makes them more stable.

• Reaching More Customers and Offering More Products: When smaller banks merge with

bigger ones, they can reach new markets, customer groups, and products. This can help them

grow and get a bigger part of the market.

• Technological Progress: Digital banking solutions can be used more quickly in Bangladesh if

they are connected to bigger banks that are good with technology. This makes things easier for

customers, better manages risks, and runs more smoothly.

• Taking Care of Loan Defaults: Non-performing loans (NPLs) are a problem in both India and

Bangladesh. Mergers and acquisitions (M&As) can help stronger banks take over weaker ones

with high NPLs, lowering risk and raising the quality of all assets.
Conclusion

One of the areas that is growing the fastest in emerging economies like Bangladesh is banking.
Researchers and experts are interested in M&A because it is seen as one of the best ways to grow
a business. Since it became more open, Bangladesh's economy has grown quickly, and banking is
one area that has seen this. Mergers and acquisitions (M&A) in the banking sector have shown
that they can help weak banks stay open by joining with bigger banks. Our study shows that
small and local banks have a hard time dealing with the effects of the global economy. Because
of this, they need help, which is one reason why they join. A smart way for some private banks to
grow was to join with other banks. The rural markets of Bangladesh have a lot of promise that
the big banks haven't looked into yet.