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on Islamic Finance |
| By: | Ullah, Nazim; Mat Nor, Fauzias; Abu Seman, Junaidah; fadly, ahmed; ainna, nur |
| Abstract: | Merger and acquisition known as a market expansion strategy. This paper examines several factors associated with M&A namely bank size, intermediary role, modes of financing, bank-specific variables, and macro-economic variables on the operational performance and stability along with the mediation role of market structure for Islamic banks. This paper employs panel data techniques and SEM to analyse a set of unbalanced panel samples of 10 Islamic banks during 2004Q1 to 2020Q4 from six countries, namely Qatar, Kuwait, Saudi Arabia, United Arab Emirate, Bahrain, and Pakistan. The results indicate that M&A improve post-M&A performance of Islamic banks while stability does not improve. Interestingly, there is no mediation effects of market structure on the relationship between M&A, operational performance, and stability. Policymakers should emphasis M&A towards the Islamic bank, however, to be stable, it may take more than 5 years. |
| Keywords: | Merger and Acquisition (M&A); operational performance; bank stability; market structure; Islamic banks. |
| JEL: | G34 |
| Date: | 2023–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118683&r=isf |
| By: | Ullah, Nazim; Mat Nor, Fauzias; Abu Seman, Junaidah; Ainna Binti Ramli, Nur; FADLY, AHMED |
| Abstract: | The corporate expansion approach is mergers and acquisitions. The paper aims to analyze the impact of mergers and acquisitions on the Islamic banking sector's operational performance. This study uses empirical research methodologies, such as panel data regression, to examine samples of 10 Islamic banks involved in M&A from 6 countries, gathered from the International Monetary Fund, World Bank, FicthConnect, and Bloomberg from 2004Q1 to 2020Q4. Accounting-based measurements are used to quantify operational success, whereas the Herfindahl-Hirschman Index and the concentration ratio are used to signify market structure. To estimate M&A results, Stata package 14.2 is used (5 years pre and 5 years post). According to the findings, M&A improve the operational performance of Islamic banks. In addition, small-sized banks outperform large and medium-sized banks, market structure (LHHI) degrades M&A performance. Therefore, the paper suggests that Islamic banks should be involved in M&A deals and remove the constraints of size. |
| Keywords: | M&A, Bank Sizes, Market Structure, Operational Performance, Islamic Bank |
| JEL: | G34 |
| Date: | 2023–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118681&r=isf |
| By: | Ullah, Nazim |
| Abstract: | Merger and acquisition (hereafter M&A) is the business expansion strategy. Islamic bank is the niche banking sector compared to its peers while it is categorized as too small to succeed. The paper aims to analyze the impact of M&A on the operational performance of the Islamic banking sector. This study employs empirical research methods, namely cross-sectional pooled regression and panel data regression to analyse a set of samples consisting of 10 Islamic banks involved in M&A from 6 countries, drawn from the International Monetary Fund (IMF), World bank, FicthConnect and Bloomberg over the years of 2009Q1 to 2018Q4. The operational performance is estimated using accounting-based measures while the Herfindahl-Hirschman Index (HHI) and the concentration ratio (CR) are applied to signify market structure. Total assets, total deposits and operating income variables are used to represent bank size. The findings indicate that bank size shows negative impact on operational performance. While the segregated level of bank size which is larger banks and concentrated market structure have a greater impact on the operational performance of Islamic banks in the post-M&A period. The paper concludes by discussing policy implications for policy-makers and academicians for having the strategic decision on the M&A deal and further research. |
| Keywords: | Bank Sizes, Islamic Banking, M&A, Market Structure, Operational Performance |
| JEL: | G34 |
| Date: | 2022–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:118682&r=isf |