POST-MERGER CUSTOMER BEHAVIOR AND ITS RELATIONSHIP WITH PERCEIVED SERVICE QUALITY IN THE BANKING INDUSTRY IN QATAR

Abstract

Mergers, in the banking industry, occur all over the world. Recently, the first merge in Qatar occurred between Barwa Bank and International Bank of Qatar (IBQ). A new entity emerged from this merger and was branded as Dukhan Bank. Dukhan bank is now an Islamic bank which means that the business model of IBQ is no longer in practice. In banks, service quality is on top of all other elements of business development and customer satisfaction. Service quality has a strong and direct relation to costs, profitability, customer satisfaction, customer retention, and positive word-of-mouth. This research adopts a different approach to the matter of mergers among banks. Mergers among banks are often studied from financial and strategic point of view without fair focus on the level of service quality and customer satisfaction. This study discusses and analyzes the post-merger impact of banks on customer perception of service quality and customer satisfaction. The literature review provided in this research presents a theoretical background about the topic of mergers in the banking industry. It also attempts to define customers' satisfaction and service quality. The research presents the service quality dimensions model as a model to examine the perception of service quality among the customers of the two banks. Accordingly, the research develops five hypotheses to measure the service quality perception, linking it to the range of services, service channels, and ethical considerations. The research also links the service quality dimensions to customers' satisfaction and satisfaction to customers' behavioral intentions. In order to collect the research data, a questionnaire was distributed to 287 customers, in which 157 are former IBQ customers and 130 from Barwa bank customers. The research findings were analyzed using SmartPLS software. The AVE measurement model, the discriminated validity model, and the Heterotrait-Monotrait (HTMT) ratio were used to test the validity and reliability of the results. The three models verified and approved the standards of validations, providing strong support for the reliability and validity. The bootstrapping technique was used to examine the significance of the variables. Four out of the five hypotheses of the study were supported. However, the service quality dimensions, and service channels (hypotheses 2 and 4) were partially supported. One of the most important findings in this study was that IBQ customers were less considerate of ethical standards and its relations to service quality dimensions in two dimensions (Tangibility and Responsiveness) which support the idea that customers of Islamic banks are the ones considerate of ethical standards compared to traditional banks. It was concluded that mergers and acquisition has a direct and significant impact on the level of service quality perceived by the customers and their satisfaction level. It was also concluded that all the variables are interrelated and would affect customers' behavioral intentions. Accordingly, the study provided a set of theoretical and managerial implications based on the research findings and discussion. There is also a problem of generalization in the study due to the fact that it is a unique case in a unique country. The customers, included in the study, have already chosen to remain after the merger, which indicates that the results will be different if it was possible to interview the people that left the bank. It was suggested that future studies should study the service quality and satisfaction level before and after the merge. Future studies can also compare this study to other bank mergers in other countries.