Why Do Banks Merge?

Dario Focarelli, Fabio Panetta () and Carmelo Salleo
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Dario Focarelli: Bank of Italy, Economic Research Department
Fabio Panetta: Bank of Italy, Economic Research Department

No 361, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The banking industry is consolidating at an accelerating pace, yet no conclusive results have emerged on the benefits of mergers and acquisitions. We analyze the Italian market, which is similar to other main European countries. By considering both acquisitions (i.e. the purchase of the majority of voting shares) and mergers we evidence the motives and results of each type of deal. Mergers seek to improve income from services, but the increase is offset by higher staff costs; return on equity improves because of a decrease in capital. Acquisitions aim to restructure the loan portfolio of the acquired bank; improved lending policies result in higher profits.

Keywords: banks; mergers and acquisitions; performance (search for similar items in EconPapers)
JEL-codes: D21 G21 G34 (search for similar items in EconPapers)
Date: 1999-12
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Citations: View citations in EconPapers (41)

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Related works:
Working Paper: Why do Banks Merge? (2003)
Journal Article: Why Do Banks Merge? (2002)
Working Paper: Why do Banks Merge? (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_361_99

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