Consolidation in the financial industry

Especially in the highest band of production systems, M&A, operations are the main means of growth, and are usually intended to expand the corporate structure through policies of both production integration and strategic diversification. M&A operations have been widespread in the financial sector since the early ‘90s of the last century, and have brought about a radical transformation of the structural characteristics of the banking and financial systems, in both Europe and the United States.In particular, this mass of mergers and acquisitions has led to an increase, across the board, in the degree of concentration of the credit supply, and the availability of financial services on a vast scale, targeting different types of clientele and markets. The formation of extremely large groupings of intermediaries and the demolition of the barriers to the mobility of the supply and demand for financial services are further effects of the rush by banks, insurance firms and other categories of financial players to engage in mergers and take-overs amongst themselves, both on a national scale, and subsequently at the cross border level. Recently, the grave financial crisis which originated on the American market and rapidly spread throughout the world has highlighted a number of critical aspects of financial consolidation and globalisation processes, leading observers to consider the possible limits to this process and the role public authorities may play in guiding systems' structures towards a balanced mix of efficiency and stability.In view of its significance, the phenomenon of M&A operations in the banking and financial industries has been widely studied and has been the subject of a large number of empirical investigations, intended to measure its impacts from two main points of view: the first is macroeconomic and deals mainly with the effect of these operations on the structure of the system and the relative implications (competition mechanisms, access to credit for various types of clientele and the relative costs), while the second is more strictly corporate in nature and focuses on strategic factors and an analysis of the potential benefits, especially in terms of value creation. Within these two types of approach, a very large number of studies have set out to examine specific or partial aspects of the phenomenon, such as the extent to which it has affected the various countries or different types of intermediaries (in terms of size or area of business), the reasons, causes and implications of financial consolidation operations, their impact on external supervision and/or internal governance and control systems, and so on.As we introduce the topics discussed in this book, it may therefore be useful to attempt to provide a general definition of the phenomenon studied, many specific aspects of which will then be analysed in the various Authors' contributions.