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The effects of privatization and consolidation on bank productivity: comparative evidence from Italy and Germany

  • Elisabetta Fiorentino

    ()

    (Deutsche Bundesbank)

  • Alessio De Vincenzo

    ()

    (Bank of Italy)

  • Frank Heid

    ()

    (Deutsche Bundesbank)

  • Alexander Karmann

    ()

    (Technische Universit�t Dresden)

  • Michael Koetter

    ()

    (University of Groningen)

The Italian and German banking systems shared similar characteristics early in the 1990s but have evolved in different directions since then: Italy privatized its publicly-owned banks while Germany has maintained a large share of state-owned savings banks. Contemporaneously, banks in both markets engaged heavily in mergers and acquisitions. We analyze how these activities have affected banks� productivity in the period 1994-2004, differentiating between technical change, efficiency change and scale economies. We find that privatized banks experienced a significant increase in productivity, especially if they subsequently merged with other banks. German banks were still able to increase their productivity through consolidation.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 722.

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Date of creation: Sep 2009
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Handle: RePEc:bdi:wptemi:td_722_09
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