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Mergers And Acquisitions In Islamic Banking Sector: An Empirical Analysis On Size Effect, Market Structure, And Operational Performance
Journal
International Journal of Financial Innovation in Banking
Date Issued
2022
Author(s)
Fauzias Mat Nor
Nazim Ullah
Junaidah Abu Seman
Nur Ainna Ramli
Ahmad Fadly Nurullah Bin Rasedee
DOI
10.1504/IJFIB.2022.10046760
Abstract
The corporate expansion approach is mergers and acquisitions. The
paper aims to analyse 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 ten
Islamic banks involved in M&A from six 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 (five years pre and five 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, with 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
paper aims to analyse 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 ten
Islamic banks involved in M&A from six 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 (five years pre and five 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, with 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
Subjects