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Winners or Losers? The Effects of Banking Consolidation on Corporate Borrowers
Author(s) -
DI PATTI EMILIA BONACCORSI,
GOBBI GIORGIO
Publication year - 2007
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.2007.01220.x
Subject(s) - consolidation (business) , cash flow , business , monetary economics , mergers and acquisitions , bank credit , shock (circulatory) , financial system , sample (material) , cash , economics , finance , medicine , chemistry , chromatography
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.