Interlocking Directorates and Competition in Banking*

Guglielmo Barone (), Fabiano Schivardi and Enrico Sette

No 20155, Working Papers LuissLab from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: We study the e ects on loan rates of a quasi-experimental change in the Italian leg- islation which forbids interlocking directorates between banks. We use a di erence- in-di erences approach and exploit multiple banking relationships to control for unobserved heterogeneity. We find that the reform decreased rates charged by pre- viously interlocked banks to common customers by between 10-30 basis points. The e ect is stronger if the firm had a weaker bargaining power vis-a-vis the interlocked banks. Consistent with the assumption that interlocking directorates facilitate col- lusion, interest rates on loans from interlocked banks become more dispersed after the reform.

Keywords: Interlocking directorates; competition; banking (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ban and nep-com
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Related works:
Working Paper: Interlocking Directorates and Competition in Banking (2022)
Working Paper: Interlocking Directorates and Competition in Banking (2022)
Working Paper: Interlocking Directorates and Competition in Banking (2020)
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