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

44 Pages Posted: 4 Nov 2002

See all articles by Dean F. Amel

Dean F. Amel

Board of Governors of the Federal Reserve System

Colleen Barnes

Government of Canada - Department of Finance Canada

Fabio Panetta

Bank of Italy

Carmelo Salleo

Bank of Italy

Date Written: June 2003

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.

Keywords: Mergers, Efficiency, Bank Mergers, Insurance Companies, Asset Management

JEL Classification: G21, G34, L1

Suggested Citation

Amel, Dean F. and Barnes, Colleen and Panetta, Fabio and Salleo, Carmelo, Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence (June 2003). Available at SSRN: https://ssrn.com/abstract=329860 or http://dx.doi.org/10.2139/ssrn.329860

Dean F. Amel

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Colleen Barnes

Government of Canada - Department of Finance Canada ( email )

Esplanade Laurier, 18th floor, East Tower
Ottawa, Ontario K1A 0G5
Canada

Fabio Panetta (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy
+39 06 4792 4143 (Phone)
+39 06 4792 3723 (Fax)

Carmelo Salleo

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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