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The heterogeneous effects of bank mergers and acquisitions on credit to firms: evidence from Italian macro-regions

Author

Listed:
  • Silvia Del Prete

    (Bank of Italy)

  • Cristina Demma

    (Bank of Italy)

  • Iconio Garrì

    (Bank of Italy)

  • Marco Piazza

    (Bank of Italy)

  • Giovanni Soggia

    (Bank of Italy)

Abstract

The literature has shown that in the short- and medium-term bank mergers and acquisitions (M&As) may generate a temporary reduction in firm credit. Using bank-firm matched data, this paper investigates the impact of M&As involving Italian banks over the period 2009-2019 on credit to firms, exploring possible heterogeneities across several dimensions. During a 3-year time window after each deal, we detect a reduction in loans to firms financed by target banks, in line with the existing evidence. The drop is smaller for infra-group mergers, when the target is healthy or is the firm's main bank, while is larger for southern firms, independently of bank location. Other things being equal, we suggest that this "South effect" is mainly related to the negative externalities that characterize the business environment in Southern Italy, for which southern firms are more likely to be subject to a severe selection after a bank reorganization.

Suggested Citation

  • Silvia Del Prete & Cristina Demma & Iconio Garrì & Marco Piazza & Giovanni Soggia, 2022. "The heterogeneous effects of bank mergers and acquisitions on credit to firms: evidence from Italian macro-regions," Temi di discussione (Economic working papers) 1382, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1382_22
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    References listed on IDEAS

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    Cited by:

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    3. Errico, Lucia & Rondinella, Sandro & Trivieri, Francesco, 2024. "Diversity in banking and new firm formation. Insights from the Italian local credit markets," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1095-1109.

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    More about this item

    Keywords

    business lending; mergers and acquisitions; banking system’s structure; North-South divide;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • 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
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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