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The Impact Of Consolidation On Islamic Financial Services Industry

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  • IQBAL, ZAMIR

    (The World Bank Treasury in Washington, D.C. USA)

Abstract

Small asset size of Islamic Financial Institutions (IFIs) is often cited an obstacle for further growth. Looking at the motivating factors behind consolidation wave in conventional financial markets, this paper argues that IFIs can also benefit from consolidation in several ways. Expanding the scale of operations is not sufficient but it is essential that IFIs expand the scope of their products and services to meet the challenges of domestic and international markets. An increase in scale and scope through consolidation can provide IFIs necessary threshold to justify building a solid infrastructure for new services on both sides of the balance sheet. In addition to benefits of expanding scope, consolidation can bring benefits to IFIs through diversification and through enhanced management quality as well as efficiency gains from prudent risk taking, monitoring and anagement. The paper concludes by discussing policy implication for policy-makers and the managers before embarking on the wave of consolidation.

Suggested Citation

  • Iqbal, Zamir, 2008. "The Impact Of Consolidation On Islamic Financial Services Industry," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 15, pages 80-103.
    • Handle: RePEc:ris:isecst:0053
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    Cited by:

    1. Ullah, Nazim & Mat Nor, Fauzias & Abu Seman, Junaidah & Ainna Binti Ramli, Nur & FADLY, AHMED, 2023. "Mergers and Acquisitions in Islamic Banking Sector: An Empirical Analysis on Size Effect, Market Structure, and Operational," MPRA Paper 118681, University Library of Munich, Germany.
    2. Ullah, Nazim & Mat Nor, Fauzias & Abu Seman, Junaidah & Uddin, Akther, 2018. "Do Merger and Acquisition Affects Acquirer Bank’s Performance? A Comparative Analysis of Pre and Post Performance," MPRA Paper 108574, University Library of Munich, Germany, revised 03 Jan 2018.
    3. Ullah, Nazim & Abu Seman, Junaidah, 2018. "Merger and Acquisition in Banking Sector: A Review of the Literature," MPRA Paper 108575, University Library of Munich, Germany, revised 01 Jan 2018.
    4. Ullah, Nazim & Mat Nor, Fauzias & Abu Seman, Junaidah & fadly, ahmed & ainna, nur, 2023. "Acquirer’s Operational Performance and Stability of Islamic Banks: Mediation Role of Market Structure," MPRA Paper 118683, University Library of Munich, Germany.
    5. Ullah, Nazim, 2022. "The Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking sector," MPRA Paper 118682, University Library of Munich, Germany.
    6. Siti Nor Amira Mohamad & Mohamad Yazis Ali Basah & Muhammad Ridhwan Ab. Aziz, 2018. "Implementation of Islamic Elements as a Parameter for Credit Evaluation Process: Exploring Shariah Adviser’s Perceptions," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(6), pages 745-763, June.

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