The ability of banking mergers to reduce financial failure: An applied study of a sample of private commercial banks in Iraq

Abstract

Bank mergers are one of the strategies adopted to restructure the banking sector in recent years. It works to increase the size of banks, and then increase their capital, to improve shareholder value through expansion and development of banking activities. This study is an attempt to analyze the value of shareholders’ rights and their ability to compete, in light of the option of banking merger, avoiding financial failure, and then increasing the financial capabilities to fulfill obligations towards depositors and lenders, meet the needs of investors, and then gain the trust of the regulatory authorities.

Therefore, this research deals with the ability of banking mergers in reducing financial failure. It included a theoretical aspect of the most important findings of the researchers regarding the research variables, in addition to the applied aspect, which included a sample of six banks from the Iraqi private sector. The research attempted to answer several questions from Include it. What is the contribution of banking mergers in reducing financial failure? How prepared are Iraqi banks for banking merger? One of the hypotheses of the study is that banking merger is one of the important options that Iraqi private banks can rely on to limit their financial failure and prevent them from falling into it. The most prominent goals that the research sought were to evaluate the analysis of consistency in banking mergers to determine successful options, and to estimate the analysis of The cost, divided into cash and stock exchange, to determine the value of the merger for the banks in the research sample, and to estimate the Sherrod model to predict the financial failure of the banks in the research sample.

The research reached a set of conclusions, the first of which is that merger is one of the strategies followed by banks to increase their resources and enjoy the maximum amount of benefits and thus avoid financial failure. There are legal, economic and social requirements in the Iraqi environment that help with banking merger in Iraq.

The research came out with a set of recommendations, the most important of which is the need for the Central Bank and other financial institutions to urge banks to merge banking and benefit from economies of scale, and for the government to work to grant incentives and provide support to encourage banks to merge, including setting tax exemptions, providing advice, and facilitating Measures to accelerate mergers in the service of the national economy.