Mergers and acquisitions in OIC countries: the role of strategic similarity in bank performance

Abstract

Purpose - This research aims to evaluate the impact of strategic similarity on MA performance in banking within OIC countries. The study investigates how strategic alignment influences MA outcomes and explores the role of cultural fit, cross-border factors, and capital adequacy in shaping post-merger success.Method - A quantitative approach is used in this study, using secondary data from annual reports of banking institutions in OIC member countries that experienced mergers and acquisitions from 2013 to 2022. This study uses 38 MA transaction data obtained from Bank Focus. The hypothesis is tested using a partial least squares structural equation model.Result - The finding reveals that the strategic similarity factor could not explain the success of MA performance for both Islamic and conventional banks. Cultural misalignment and cross-border regulatory issues are key factors affecting post-merger success. The one-year observation period was too short, but capital adequacy was found to influence performance significantly.Implication - Theoretically, models of MA success should include cultural and regulatory dimensions and consider a longer-term view. Managers should prioritise cultural integration, address regulatory challenges, and align capital adequacy strategies to improve post-merger outcomes and resilience.Originality - This research discussed the factors determining successful MA performance in banks in OIC countries. The findings can be used to develop insights into mergers and acquisitions in the banking sector.