This paper analyses the impact on firm credit of mergers and acquisitions (M&As) involving Italian banks over the period 2009-2019, evaluating possible heterogeneities based on the type and the purpose of the consolidation, the characteristics of the banks involved in the M&As and those of borrowing firms.
During a 3-year time window after each deal, loans to firms financed by target banks are on average 1.8 percent lower than what would have been observed without the M&A. The impact is smaller for infra-group mergers, when the target is healthy or is the firm's main bank. Independently of bank location, the effect is larger for financially fragile firms, due both to idiosyncratic factors and because they are more greatly affected by negative externalities, which are stronger in the South.
