Bank deregulation and acquisition activity: the cases of the US, Italy and Germany
| DOI | https://doi.org/10.1108/13581980710744084 |
| Pages | 199-209 |
| Date | 15 May 2007 |
| Published date | 15 May 2007 |
| Author | Jens Hagendorff,Michael Collins,Kevin Keasey |
| Subject Matter | Accounting & finance |
Bank deregulation and
acquisition activity: the cases
of the US, Italy and Germany
Jens Hagendorff, Michael Collins and Kevin Keasey
Leeds University Business School, The University of Leeds, Leeds, UK
Abstract
Purpose – Bank regulators across the world have recently lifted restrictions on where banks can
operate and what type of activities they can perform. Following the deregulation of the sector, bank
mergers and acquisitions have grown substantially. The purpose of this paper is to outline bank
deregulation and acquisition activity, focusing on the USA, Italy and Germany.
Design/methodology/approach – The paper looks at how changes in the regulatory regime of the
USA, Italy and Germany have spurred bank merger activities. For each country, future polices that
bank supervisors may adopt in order to benefit from a more integrated financial sector are also
critically discussed.
Findings – Over the last two decades, supervisors in the USA, Italy and Germany have begun to
deregulate parts of their banking industries, thus, sparking a process of consolidation in their national
banking sectors that still has not ended.
Originality/value – The paper presents a recent history of deregulation in the USA, Italy and
Germany, offering recommendations as to what regulators should do next.
Keywords Banks, Acquisitionsand mergers, United States of America, Italy,Germany
Paper type Research paper
1. Introduction
Over the last two decades, mergers and acquisitions (M&A) in the banking sector have
seen a sharp increase. The growing M&A activity in various countries has larg ely been
a response to the deregulation of the industry as exemplified by the abolition of
geographic restrictions on banks and the demolition of demarcation lines between
different types of financial services. This paper discusses the impact of bank
deregulation on bank merger activity. Essentially, the argument is that if there are
benefits associated with a more integrated banking sector – and the recent conduct of
bank regulators in many countries suggests they believe this to be the case – it is an
important issue to examine how more M&A and, ultimately, more financial integration
can be achieved. In fact, regulators in Germany and Italy have recently encouraged
their financial services sectors to speed up integration such that globally competitive
credit institutions are created (Financial Times, 2004; The Banker, 2006).
Since, the extent to which individual banking sectors have consolidated to date
varies considerably across countries (with important implications for the stru cture and
efficiency of local credit institutions), few general conclusions about deregulation and
bank M&A can be drawn from large cross-sections of countries (Barth et al., 2004).
This is why this paper focuses on only three banking systems – the US, Italy and
Germany. While these countries differ in how they deregulated banking in the past,
their banking sectors share a high potential for more consolidation in the near future.
The paper highlights the different approaches that regulatory regimes in the USA,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
Bank
deregulation
199
Journal of Financial Regulation and
Compliance
Vol. 15 No. 2, 2007
pp. 199-209
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581980710744084
To continue reading
Request your trial