Islamic Banks’ Mergers and Acquisitions – Impacts on Performance and Financial Crisis in the United Kingdom

Abstract

Purpose

The purpose of this chapter is to reflect the impact of mergers and acquisitions processes on performance of Islamic banking industry in the United Kingdom through studying within.

Design/Methodology/Approach

The present research uses explanatory approach in order to examine the research problems, methodology used in the research is quantitative methods through calculating the long-term share prices performance of the UK Islamic banks’ sample. First, the researchers use the control Islamic bank in the event-time approach. The researchers calculate annual abnormal returns using the buy-and-hold abnormal return (BHAR) method over a period of five years, counting from the quarter of a year when the transaction is said to be effective.

Research Findings

The research findings found that there are significant differences in the Islamic mergers and acquisitions post-long-run performance of the UK Islamic banks to the control the crises that face the United Kingdom from 2007 to 2010. However, the acquiring Islamic bank in high-tech industries had a negative effect on their long-term performance.

Limitations/Implications

The present research has been applied for the Islamic banking industry in the United Kingdom after the Western Europe industry from 2007 to 2010.

Practical Implication

The main implementations of the present research is valuing UK banks carried out the Islamic mergers and acquisitions of a broad range of management disciplines encompassing the financial, strategic, behavioral, operational, and cross-cultural aspects of this challenging and high-risk activity.

Originality/Value

The Islamic mergers and acquisitions have placed a significant amount of value added on the motivation of large banks for engaging in banking mergers and acquisitions’ transactions.

Citation

Kandil, T. and Chowdhury, D. (2014), "Islamic Banks’ Mergers and Acquisitions – Impacts on Performance and Financial Crisis in the United Kingdom", The Developing Role of Islamic Banking and Finance: From Local to Global Perspectives (Contemporary Studies in Economic and Financial Analysis, Vol. 95), Emerald Group Publishing Limited, Leeds, pp. 119-140. https://doi.org/10.1108/S1569-3759(2014)0000095016