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The heterogeneous effects of bank mergers and acquisitions on credit to firms: evidence from Italian macro-regions

Silvia Del Prete (), Cristina Demma (), Iconio Garrì (), Marco Piazza () and Giovanni Soggia ()
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Silvia Del Prete: Bank of Italy
Cristina Demma: Bank of Italy
Iconio Garrì: Bank of Italy
Marco Piazza: Bank of Italy
Giovanni Soggia: Bank of Italy

No 1382, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The literature has shown that in the short- and medium-term bank mergers and acquisitions (M&As) may generate a temporary reduction in firm credit. Using bank-firm matched data, this paper investigates the impact of M&As involving Italian banks over the period 2009-2019 on credit to firms, exploring possible heterogeneities across several dimensions. During a 3-year time window after each deal, we detect a reduction in loans to firms financed by target banks, in line with the existing evidence. The drop is smaller for infra-group mergers, when the target is healthy or is the firm’s main bank, while is larger for southern firms, independently of bank location. Other things being equal, we suggest that this “South effect†is mainly related to the negative externalities that characterize the business environment in Southern Italy, for which southern firms are more likely to be subject to a severe selection after a bank reorganization.

Keywords: business lending; mergers and acquisitions; banking system’s structure; North-South divide (search for similar items in EconPapers)
JEL-codes: D40 G10 G21 G34 L10 (search for similar items in EconPapers)
Date: 2022-10
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-com, nep-eur and nep-sbm
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