Strategic and regulatory challenges of mergers and acquisitions in the Libyan banking sector: a theoretical and practical approach

Purpose This study aims to explore the gap between the theoretical advantages of mergers and acquisitions (M&A) and their limited success in Libya’s banking sector, examining how M&A strategies perform within a politically unstable and heavily regulated environment. Design/methodology/approach The study used a qualitative approach, conducting semi- structured interviews with 50 senior managers from Libyan banks. Thematic analysis with NVivo software examined five core hypotheses derived from (M&A) theory. Findings Although M&A is expected to enhance financial performance and efficiency, in Libya it is hampered by outdated systems, high integration costs, regulatory ambiguity and political interference, while cultural misalignment, managerial overconfidence, behavioural biases, weak oversight and poor infrastructure obstruct post-merger benefits. Research limitations/implications Based on manager perceptions from a single country, this cross-sectional study lacks direct financial performance metrics. Future research should adopt longitudinal, quantitative and comparative approaches to link specific integration actions with financial and operational outcomes in fragile or transitional banking systems. Practical implications Prioritise core systems and compliance upgrades; pursue regulatory reform; leverage regional/fintech partnerships and selective cloud solutions to lower integration costs; invest in leadership and change-management capability. Social implications Better integrated, well-regulated, technologically modern banks could widen financial inclusion, support reconstruction finance and reduce employment disruption through planned workforce transition and financial/digital literacy initiatives. Originality/value This study integrates M&A, institutional and behavioural finance perspectives to explain outcomes in a state-controlled, post-conflict banking environment; it extends M&A theory by showing how institutional fragmentation and political drivers shape results in transitional/fragile markets.