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

  • Fiorentino, Elisabetta
  • Vincenzo, Alessio De
  • Heid, Frank
  • Karmann, Alexander
  • Koetter, Michael

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 Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 2: Banking and Financial Studies with number 2009,03.

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Date of creation: 2009
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Handle: RePEc:zbw:bubdp2:200903
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