Are mergers among cooperative banks worth a dime? Evidence on efficiency effects of M&As in Italy

Paolo Coccorese and Giovanni Ferri

Economic Modelling, 2020, vol. 84, issue C, 147-164

Abstract: We study the intense wave of mergers among Italian mutual cooperative banks (Banche di Credito Cooperativo, BCCs) trying to assess whether those mergers were efficiency-enhancing. Specifically, we employ a two-step procedure: first estimating bank-level cost efficiency scores over 1993–2013 via a stochastic frontier approach, then trying to explain the estimated BCCs' scores with a set of merger status dummies (never merged, before the first merger, merged once, merged twice, etc.) and a vector of control variables. We find that mergers increase mutual banks' cost efficiency only in 5% of the mergers, precisely those in which a BCC has merged at least three successive times with other BCCs. Besides, we conjecture that the serial mergers led those BCCs to reach remarkably large size and this could harm especially marginal borrowers (i.e. those likely served by smaller banks but neglected by bigger ones), with strong adverse impact on development and inequality and violating BCCs' ethics and mission.

Keywords: Banking; Cooperative banks; Mergers; Efficiency (search for similar items in EconPapers)
JEL-codes: D40 G21 G34 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999318303444
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:84:y:2020:i:c:p:147-164

DOI: 10.1016/j.econmod.2019.04.002

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().