Libyan Banking Mergers and Acquisitions and Small and Medium Enterprise Lending

Abstract

Bank mergers and acquisitions can affect small and medium business lending. This study used a qualitative, case-study approach to examine the impact of bank mergers and acquisitions on small and medium business lending in Sebhā, Libya. Researchers have studied the reasons and theories behind banking mergers and acquisitions, and their history and conceptual framework. This study contributes to the literature by showing the significant role mergers and acquisitions play in third-world countries’ economies, highlighting the impact on small and medium businesses. These study results can also apply to other similar economies that experience identical problems, yielding opportunities for improvement. The sample for the case study were 20 employees from the Libyan Central bank – South branch’s loan department. After interviewing the employees, samples were compared, and main ideas were selected through qualitative analyses. The findings suggest that despite the lack of competition which hinders small and medium businesses due to a reduced quality of the banks’ services, mergers and acquisitions allow for the creation of large-sized organizations that decrease the likelihood of collapse during supervisory regime’s instability. The findings also revealed factors such as the unavailability of vital guarantees required by the banks and scarcity of funds to cover the loans are significant factors that hindered obtaining loans by small and medium enterprises.