Consolidation and Efficiency in the Financial Sector: A Review of the International Evidence

By Dean F. Amel, Colleen Barnes, F. Panetta, C. Salleo. 2003

599 citations recorded by the source corpus.

In response to fundamental changes in regulation and technology, the financial industry around the world is undergoing an unprecedented wave of consolidation. A growing body of empirical literature has attempted to measure the efficiency gains from MA however there is little sense of how the results might depend on the country, industry and time period analysed. In this paper we review critically works that cover the main sectors of the financial industry (commercial and investment banks, insurance and asset management companies) in the major industrialised countries over the last twenty years, searching for common patterns that transcend national and sectoral peculiarities. We find that consolidation in the financial sector is beneficial up to a relatively small size in order to reap economies of scale, but there is little evidence that mergers yield economies of scope or gains in managerial efficiency.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f7f82534fca58334900554e90183e72ddabd59d1

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Citations in the corpus

Social efficiency in microfinance institutions (2009, background): “(1993), and Amel et al. (2004). An earlier study found that MFIs operating in different countries, adapt to the environment in which they work; Gutiérrez-Nieto et al. (2006). In that paper, only Latin American MFIs were studied.”
Enjoying the Quiet Life under Deregulation? Evidence from Adjusted Lerner Indices for U.S. Banks (2012, unknown): “8 See the surveys in Berger and Humphrey (1997), Berger et al. (1999), Amel et al. (2004), and Bos and Kolari (2005).”
The End of Market Discipline? Investor Expectations of Implicit State Guarantees (2013, background): “Moreover, most research has concluded that economies exist only for financial institutions that are not very large (Amel et al. 2004; Berger and Humphrey 1994; Berger and Mester 1997).”
The Cost Efficiency of German Banks: A Comparison of Sfa and DEA (2006, background): “This substantial deviation from usually obtained magnitudes of around 80% obtained for US and European studies casts some doubt as to an appropriate specification of the cost function (Amel et al., 2004).”
Performance and Financial Ratios of Commercial Banks in Malaysia and China (2010, background): “Athanasoglou et al. (2006) and Amel et al. (2004) suggested that the effects of the bank size on profitability may be positive up to a certain limit and beyond that point it could be negative due to various factors such as the sample country selected and period of study.”