Template-Type: ReDIF-Paper 1.0
Author-Name: Paolo Coccorese 
Author-X-Name-First: Paolo 
Author-X-Name-Last: Coccorese
Author-Email: coccorese@unisa.it
Author-Workplace-Name: University of Salerno
Author-Name: Giovanni Ferri 
Author-X-Name-First: Giovanni
Author-X-Name-Last: Ferri
Author-Email: g.ferri@lumsa.it
Author-Workplace-Name: LUMSA University 
Author-Name: Fabiola Spiniello 
Author-X-Name-First: Fabiola  
Author-X-Name-Last: Spiniello
Author-Email: 
Author-Workplace-Name: University of Salerno
Title: Are mergers among cooperative banks worth a dime? Evidence on post-M&A efficiency in Italy

Abstract: In this paper we study the intense wave of mergers among Italian mutual cooperative banks (Banche di Credito Cooperativo, BCCs) and try to assess whether those mergers were efficiency-enhancing. For the purpose, we employ a two-step procedure: we first estimate bank-level cost efficiency scores for a large sample of Italian banks in the period 1993-2013 by means of a stochastic frontier approach, then we try to explain the estimated BCCs’ cost efficiency with a set of merger status dummy variables (never merged, before the first merger, merged once, merged twice, etc.) as well as with a vector of control variables. We find that mergers increase mutual banks’ cost efficiency only after a BCC has merged at least three successive times with other BCCs, hence after reaching a remarkably large size. However, we conjecture that this growth in size could harm especially marginal borrowers (i.e. those who are likely to be served by smaller banks but neglected by bigger ones), with a strong and adverse impact on development and inequality and in contrast with BCCs’ ethics and mission.
Length: 42 pages
Creation-Date: 2017-03
Publication-Status: 
File-URL: https://repec.lumsa.it/wp/wpC18.pdf
File-Format: Application/pdf
Number: wpC18
Classification-JEL: D40, G21, G34
Keywords: Banking; Cooperative banks; Mergers; Efficiency
Handle: RePEc:lsa:wpaper:wpC18