Template-Type: ReDIF-Paper 1.0
Author-Name: Luca Colombo
Author-X-Name-First: Luca
Author-X-Name-Last: Colombo
Author-Email: luca.colombo@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica
Author-Name: Gilberto Turati
Author-X-Name-First: Gilberto
Author-X-Name-Last: Turati
Author-Email: gilberto.turati@unicatt.it
Author-Workplace-Name: DISCE, Università Cattolica

Title: The Role of the Local Business Environment in Banking Consolidation
Abstract: We study whether local economic conditions in different areas have
an impact on the magnitude and direction of the concentration process
of a banking industry. By using probit and count data (ZIP) models to
study the consolidation of the Italian banking sector in the second half of
the 1990s, we document a significant direct impact of the local ‘business
environment’ on the concentration of the industry at the regional level.
This effect complements the well known indirect effect of macroeconomic
characteristics on the profitability and efficiency of banks. We also show
that institutional and organizational variables affect the likelihood and
number of M&A deals, and help explaining differences in performance.
Our results appear to be robust to different specifications, and to a number
of robustness checks, including alternative sets of variables defining local
‘business environment conditions’.
Length: nn pages 28
Creation-Date: 2008-01

File-URL: http://www.unicatt.it/Istituti/EconomiaFinanza/Quaderni/ief0076.pdf
File-Format: Application/pdf
File-Function: First version, 2007
Number: ief0076
Classification-JEL: G21, G34, L16
Keywords: Banking M&As, local business environment, profitability,
efficiency, credit policies, count data models
Handle: RePEc:ctc:serie3:ief0076