Bank Consolidation, Efficiency, and Profitability in Italy

July 27, 2017

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Anke Weber. Bank Consolidation, Efficiency, and Profitability in Italy, (USA: International Monetary Fund, 2017) accessed November 12, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper examines the case for efficiency-driven banking sector consolidation in Italy, evaluates its potential effects on profitability, and discusses policy options to facilitate a consolidation process that is as effective as possible. A bottom-up analysis of 386 Italian banks suggests that while profitability is expected to improve as the economy gradually recovers, operational efficiency gains are nonetheless needed to restore large parts of the banking system to healthy profitability. Banking system consolidation can play a role in facilitating such efficiency gains, but its effectiveness is likely to be most as part of a comprehensive strategy that includes complementary reforms to clean up bank balance sheets. Cross-country experience indicates that efficiency gains are more likely to follow consolidations where careful viability analyses are conducted of the synergies and operational improvements that can be achieved.

Subject: Banking, Commercial banks, Cooperative banks, Credit, Financial institutions, Money, Nonperforming loans, Stocks

Keywords: Bank consolidation, Bank reform, Banking system, Banks, Commercial banks, Cooperative banks, Credit, Global, Joint stock, Nonperforming loans, Popolare bank, Profitability, Return on equity, Stocks, WP

Publication Details

Pages:

25
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/175
Stock No:

WPIEA2017175
ISBN:

9781484309261
ISSN:

1018-5941

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