Strategic fit of potential M&As between dual banks and conventional banks: Does Islamic banking matter?

Daniel Alejandro Bonfil Penella, Felix Rainer Schmitz, Yong Tan, Jorge Antunes, Peter Wanke, S. M Julkar Naeen Abir and Md. Abul Kalam Azad

Research in International Business and Finance, 2025, vol. 77, issue PA

Abstract: During the last decades, Islamic banking has become a major influence for worldwide banking, which led to conventional banks using their existing infrastructure and branches to provide Islamic banking services. Despite the growing impact of this new type of bank, referred to as dual bank, including conventional and Islamic banking services, only a few authors have marginally analyzed them, none of them in a merger and acquisition (M&A) context. This study examines a global strategic fit of 375 bank M&As in 39 nations between 2011 and 2020. An input-oriented, two-stage network DEA (Data Envelopment Analysis) approach is used, computing several efficiency scores of the merged banks. Merging in our analysis involves a virtual combination of inputs and outputs of pairs of separate banks to test the efficiencies of this virtually merged entity. The findings reveal that the bank type impacts the virtual efficiency: dual bank M&As show a large advantage over conventional bank M&As.

Keywords: Islamic banks; Mergers and acquisitions; Network DEA (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:77:y:2025:i:pa:s0275531925001321

DOI: 10.1016/j.ribaf.2025.102876

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