The Role of Local Real and Financial Variables in Banking Industry Consolidation: The Case of Italy." Quaderni del Dipartimento di Scienze Economiche e Finanziarie “G. Prato”, Università degli Studi di Torino, n

We use probit and count data (ZIP) models to study the consolidation process of the Italian banking industry. Our empirical analysis highlights three main findings. First, we document an important role for the interplay between real and financial variables in driving the consolidation process in Italy. Second, we emphasize the importance of competition in local banking markets, suggesting that more competition renders more likely the presence of acquiring banks. Third, we show that an excess of loans over deposits collected in a given region has an impact on the presence of acquiring banks. This last result suggests that, beside the benefits in terms of efficiency stemming from banking consolidation, there could also be some costs often overlooked.