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Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence

Author

Listed:
  • Dean F. Amel

    () (Federal Reserve Board - Financial Structure Section)

  • Colleen Barnes

    () (Government of Canada - Department of Finance Canada)

  • Fabio Panetta

    () (Bank of Italy - Research Department)

  • Carmelo Salleo

    () (Bank of Italy - Research Department)

Abstract

In response to fundamental changes in regulation and technology, the financial industry around the world is undergoing an unprecedented wave of consolidation. A growing body of empirical literature has attempted to measure the efficiency gains from M&As; however there is little sense of how the results might depend on the country, industry and time period analysed. In this paper we review critically works that cover the main sectors of the financial industry (commercial and investment banks, insurance and asset management companies) in the major industrialised countries over the last twenty years, searching for common patterns that transcend national and sectoral peculiarities. We find that consolidation in the financial sector is beneficial up to a relatively small size in order to reap economies of scale, but there is little evidence that mergers yield economies of scope or gains in managerial efficiency

Suggested Citation

  • Dean F. Amel & Colleen Barnes & Fabio Panetta & Carmelo Salleo, 2003. "Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence," CEIS Research Paper 20, Tor Vergata University, CEIS.
  • Handle: RePEc:rtv:ceisrp:20
    as

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    File URL: ftp://www.ceistorvergata.it/repec/rpaper/No-20-Amel,Barnes,Panetta,Salleo.pdf
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. John Barry Howcroft & Rehan ul-Haq & Chris Carr, 2010. "An examination of cross-border strategies in banking," The Service Industries Journal, Taylor & Francis Journals, vol. 31(13), pages 2091-2109, June.
    2. Marco Valentini, 2006. "Ristrutturazione del sistema creditizio, piccole e medie imprese e crescita economica nel mezzogiorno," Departmental Working Papers of Economics - University 'Roma Tre' 0065, Department of Economics - University Roma Tre.
    3. Sylvia Kaufmann & Maria Teresa Valderrama, 2004. "The Role of Bank Lending in Market-Based and Bank-Based Financial Systems," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 88-97.

    More about this item

    Keywords

    Mergers; Efficiency; Bank Mergers; Insurance Companies; Asset Management;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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