Bank Competition and Regulatory Reform: The Case of the Italian Banking Industry

Paolo Angelini and Nicola Cetorelli

No 380, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: The paper analyzes the evolution of competitive conditions in the Italian banking industry using firm-level balance sheet data for the period 1983-1997. Regulatory reform, large-scale consolidation, and competitive pressure from other European countries have changed substantially the banking environment, with potentially offsetting effects on the overall degree of competitiveness of the banking market. We find that competitive conditions, relatively unchanged until 1992, have improved substantially thereafter, with estimated mark-ups decreasing over the last five years of the sample period. Also, there is no evidence that banks involved in mergers and acquisitions gained market power; at the same time, however, they exhibit lower than average marginal costs. Finally, after controlling for various factors that may have determined the time pattern of banks� estimated mark-ups, we still detect a significant unexplained drop in our competitive conditions indicators after 1992. This is consistent with the hypothesis that the introduction of the Single Banking License in 1993 contributed to improve bank competition.

Keywords: bank competition; mergers and acquisitions; Lerner; consolidation (search for similar items in EconPapers)
JEL-codes: G21 G34 (search for similar items in EconPapers)
Date: 2000-10
References: View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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Related works:
Working Paper: Bank Competition and Regulatory Reform: The Case of the Italian Banking Industry (2000)
Working Paper: Bank competition and regulatory reform: the case of the Italian banking industry (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_380_00

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