Abstract

The banking industry is consolidating at an accelerating pace, yet no conclusive results have emerged on the benefits of mergers and acquisitions. In order to investigate the motives and results of each type of deal we consider separately acquisitions (that is, the purchase of the majority of voting shares) and mergers, using Italian data. Mergers seek to improve income from services, but the increase is offset by higher staff costs; return on equity improves because of a decrease in capital. Acquisitions aim to restructure the loan portfolio of the acquired bank; improved lending policies result in higher profits.

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Additional Information

ISSN
1538-4616
Print ISSN
0022-2879
Pages
pp. 1047-1066
Launched on MUSE
2002-11-01
Open Access
No
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