Asset Restructuring Strategies in Bank Acquisitions: Evidence from the Italian Banking Industry

37 Pages Posted: 11 Jun 2006

See all articles by Alberto Zazzaro

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics

Pietro Alessandrini

Polytechnic University of Marche - Faculty of Economics

Giorgio Calcagnini

University of Urbino Carlo Bo - Department of Economics, Society and Politics; Università Politecnica delle Marche - Money and Finance Research Group (Mo.Fi.R.)

Date Written: June 2006

Abstract

One of the most lively debated effects of banking acquisitions is the change in lending and asset allocation of the target bank in favour of transactional activities, at the expense of small and informational opaque borrowers. These changes may be the result of two distinct restructuring strategies of the asset portfolio of the bidder bank. An asset cleaning strategy (ACS), in which the acquiring bank makes a clean sweep of all the negative net present value activities in the portfolio of the acquired bank, and an asset portfolio strategy (APS), in which the acquiring bank permanently changes the portfolio allocation of the acquired bank. In this paper we focus on Italian bank acquisitions and test which asset restructuring strategy was predominantly pursued over the period 1997-2003. Moreover, we estimate both a model for the whole Italian banking industry and a model for the acquired banks located in economic backward Southern regions. At the national level we find evidence of a primacy of ACSs over APSs. When we concentrate on bank acquisitions that occurred in the Mezzogiorno (Italy's Southern regions), evidence seems to reverse, i.e. APSs dominate over ACSs.

Keywords: Bank acquisitions, Asset restructuring strategies, Small businesses lending

JEL Classification: G21, L22

Suggested Citation

Zazzaro, Alberto and Alessandrini, Pietro and Calcagnini, Giorgio, Asset Restructuring Strategies in Bank Acquisitions: Evidence from the Italian Banking Industry (June 2006). Available at SSRN: https://ssrn.com/abstract=907300 or http://dx.doi.org/10.2139/ssrn.907300

Alberto Zazzaro (Contact Author)

Polytechnic University of Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

Pietro Alessandrini

Polytechnic University of Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

Giorgio Calcagnini

University of Urbino Carlo Bo - Department of Economics, Society and Politics ( email )

Via Saffi 42
61029 Urbino, 61029
Italy
+39 0722 305565 (Phone)

HOME PAGE: http://https://sites.google.com/a/uniurb.it/gcalcagnini/

Università Politecnica delle Marche - Money and Finance Research Group (Mo.Fi.R.) ( email )

Piazzale Martelli, 8
Ancona, 60100
Italy

HOME PAGE: http://www.econ.uniurb.it/calcagnini

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