Does Acquirer Bank Stable in Post-Merger and Acquisition? - Comparative Analysis of Islamic and Conventional Banks

Abstract

Merger and acquisition plays an important role in developing banking sectors. This paper examines acquirer stability of Islamic and conventional banks. This paper employs panel data techniques; POLS, FE and RE to analyse a set of samples for 24 banks consisting of 10 Islamic banks and 14 conventional banks involved in M&As during 2004Q1 to 2020Q4 from 6 countries namely Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Pakistan. Stata package 14.2 is used to estimate results for 5 years pre and 5 years post-M&A. The results indicate that acquirer banks are not stable in post M&A. Moreover, there is no significant differences between stability of Islamic and conventional banks since the sign of the coefficient in pre and post is the same. It is recommended that Investors, bank management, M&A analyst, academic members and regulatory bodies need to wait for the long time to have an M&A impact on the stability of Islamic and conventional banks.