Consumer intentions, reactance and the marketing implications of policy induced mergers and acquisitions in financial services

Abstract

PurposeThe purpose of this study is to establish, drawing upon the indirect effects of customer reactance from an emerging economy perspective, the marketing implications of policy induced Mergers and Acquisitions (M&A) in Financial Services.Design/methodology/approachThe study employed a quantitative research approach, relying on data from 517 customers of M&A banks in Ghana. Purposive sampling technique was used in selecting respondents for the study. Hypotheses were tested using a structural equation modelling.FindingsA positive and significant relationship between immersive marketing communication and consumer intention is revealed in the study. The presence of consumer reactance highly influenced the relationship. As a public policy tool, forced mergers and acquisitions was found to increase customer reactance. However, when customers are frequently engaged with relevant and consistent marketing communications through appropriate channels, such reactance would only be partial.Research limitations/implicationsAlthough some of the information were collected, they were not the main focus of our analysis. We acknowledge, from the sample demographics perspective, the study did not consider certain other confounding factors that could influence customers' decisions to remain or switch such as customers' level of banking, type of account, income level, banking experiences in relation to service fees, online banking etc., as these could also potentially influence customers' reactance. Perhaps these may have to be considered in future studies.Social implicationsWhen timely and relevant marketing communications are targeted at the customers who are directly impacted by the M&A process, they would experience reactance, but only partially. This has a range of marketing implications for policy-induced M&A and its impact on consumer intention, reactance and attitudes towards the new entity.Originality/valueThe marketing of financial services literature has been silent on the implications of M&A from a policy induced perspective. This study, therefore, contributes to theory by highlighting that the “destruction” of brand value of the affected firms is relatively high in a policy induced M&A and thus increases the level of customer reactance. This is because a regulator enforced M&A, as public policy, usually generates high public interest and public discourse, leading to a heightened customer reactance. However, when immersive marketing communications are targeted at the customers directly impacted by the M&A, they would experience reactance, but only partially.

The relationship between the accounting standards and the global financial crisis: empirical analysis of mergers and acquisitions in banking industry

“…In line with a prior study by Alvarez-Gonzalez and Otero-Neira (2020), they found that M&A activity has a negative impact on prices and the nearness of the bank branches, while it has a positive impact on products and services offered during the post-M&A. In addition, the M&A activity has a long story, which was required by the global financial crisis that started in the USA and European countries in 2008 (Mensah, Madichie, Mensah, & Awini, 2022). Likewise, this study uses firm-level data from the crisis economies of the world, especially during the time of the 2007-2008 crisis, to analyse the relationship between accounting standards and the financial crisis in terms of banking performance for M&As.…”

“…Similarly, Lin, Hung, and Li (2006) showed that in the US banking sector, the firm's performance increased after M&As with respect to its productivity, profitability and shareholder's value. Mensah et al (2022) suggest that the global financial crisis has motivated a continuing and many-faceted debate concerning the actions that regulators can take to increase the stability of the financial system. Another key study by Acharya and Ryan (2016) found a positive relationship between current banks' financial reporting rules and operating performance during the financial crisis period.…”

“…The term M&A has focused on different meanings such as a merger refers to the fusion of two or more organizations into one and an acquisition is the purchase of one firm by another (Mensah et al , 2022). According to Gersdorff and Bacon (2009), an M&A can be defined as a combination of two firms where the bidder usually pays a premium depending upon the synergies involved in the buying, selling and combining of companies.…”

“…Mensah et al (2022) suggest that the global financial crisis has motivated a continuing and many-faceted debate concerning the actions that regulators can take to increase the stability of the financial system. Another key study by Acharya and Ryan (2016) found a positive relationship between current banks’ financial reporting rules and operating performance during the financial crisis period.…”

The antecedents of m-banking usage under capital controls in Greece – a mixed methods approach

“…Besides, more advanced services are provided via m-banking platforms where consumers can purchase and trade financial portfolios, follow the updated stock markets, and conduct a series of financial activities (Jebarajakirthy and Shankar, 2021). Therefore, banking organizations are providing their consumers with various alternatives to meet individual needs by communicating and offering up-to-date information and satisfaction (Malaquias and Hwang, 2019;Mensah et al, 2022). To that end, both banking organizations and consumers achieve benefits and derive satisfaction by adopting m-banking services.…”