Merger and Acquisition in Banking: Implications for Global Financial Setors Between Conventional and Islamic Banks

Abstract

This study examines the implications of mergers and acquisitions (M&A) in the banking sector, focusing on the differences between conventional and Islamic banks. The research aims to explore how these M&A activities influence financial performance, market structure, and overall operational efficiency. A key research question investigates the strategic drivers behind M&A in both banking systems and the specific challenges faced by Islamic banks in adhering to Shariah compliance. A qualitative methodology was employed, consisting of an extensive literature review and analysis of financial data from various banks. The study gathered insights from academic sources, industry reports, and case studies to assess the impact of M&A activities on banks' growth, market performance, and stability. Results indicate that M&A activities have significant positive effects on operational efficiency, cost savings, and market expansion for both conventional and Islamic banks. However, Islamic banks face unique regulatory challenges due to the need for Shariah compliance, which complicates post-merger integration. The study concludes that while M&A transactions enhance competitiveness and resilience, careful regulatory planning and cultural alignment are essential for successful integration, particularly in cross-border deals involving Islamic and conventional banking systems.