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Why Do Banks Merge? Author info | Abstract | Publisher info | Download info | Related research | Statistics Dario Focarelli (Bank of Italy, Economic Research Department)
Fabio Panetta () (Bank of Italy, Economic Research Department)
Carmelo Salleo (Bank of Italy, Economic Research Department)
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.
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Paper provided by Bank of Italy, Economic Research Department in its series Temi di discussione (Economic working papers) with number
361.
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Date of creation: Dec 1999Date of revision:
Handle: RePEc:bdi:wptemi:td_361_99Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma Web page: http://www.bancaditalia.it More information through EDIRC
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Keywords: banks mergers and acquisitions performance Other versions of this item:
Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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