Cover IMF Working Papers
Bank Consolidation, Efficiency, and Profitability in Italy
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 175
Language:
English
Publication Date:
27 Jul 2017
DOI:
https://doi.org/10.5089/9781484309261.001
ISBN:
9781484309261
ISSN:
1018-5941
Pages:
25
Keywords:
WP; bank consolidation; banking system; joint stock; popolare bank; bank reform; banks; profitability; return on equity; Commercial banks; Nonperforming loans; Credit; Cooperative banks; Stocks; Global
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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.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund