Internal Markets and M&A Efficiency Gains: Evidence from Bank Branch-level Data

Lucas Argentieri Mariani () and Bernardo Ricca ()
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Lucas Argentieri Mariani: Bocconi University
Authors registered in the RePEc Author Service: Neryvia Pillay

No 191, ERSA Working Paper Series from Economic Research Southern Africa

Abstract: We study how firms reallocate internal resources after an M&A operation. We focus on the banking sector and leverage matched employee-branch data and branch-level financial information. Firms use the enlargement of internal labor and capital markets triggered by the M&A to reallocate resources within the organization. Labor and internal funds are reallocated to acquirer branches. Restructuring enhances profitability at both acquirer and target branches, even after accounting for local market power gains. We show that these effects are more prominent in municipalities where the consolidated bank had larger local internal labor markets at the time of the consolidation.

Keywords: Productivity; Internal Markets; Efficiency gains (search for similar items in EconPapers)
JEL-codes: G21 G34 L22 (search for similar items in EconPapers)
Date: 2025-07
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Published in ERSA Working Paper Series, July 2025

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