Winners or Losers? The Effects of Banking Consolidation on Corporate Borrowers




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    • Emilia Bonaccorsi di Patti and Giorgio Gobbi are with Bank of Italy, Economic Research Department. We thank Allen Berger, Federico Bandi, Piero Cipollone, Giovanni Dell'Ariccia, Andrea Generale, Luigi Guiso, Han Hong, Anil Kashyap, Steven Ongena, Fabio Panetta, Richard Rosen, Greg Udell, participants at the Corporate Finance Brown Bag Lunch at the University of Chicago, the University of Modena, the 2003 Federal Reserve Bank of Chicago Conference on Bank Structure and Competition, the 2003 ECB-CFS Research Network on “Capital Markets and Financial Integration in Europe” in Helsinki, an associate editor, and an anonymous referee for their comments. The opinions expressed are those of the authors and do not necessarily represent those of the Bank of Italy or its staff. Roberto Felici provided excellent research assistance with the data.


We estimate the impact of bank mergers and acquisitions (M&As) on outstanding credit, credit lines, and the sensitivity of investment to cash flow using a large sample of Italian corporate borrowers. We distinguish between firms that experienced relationship termination as a consequence of bank M&As and those that did not. Our findings are consistent with bank M&As having an adverse effect on credit, particularly when the M&A is followed by relationship termination. The effect persists 3 years and then is absorbed, suggesting that firms are able to compensate for the negative shock.