Interlocking Directorates and Competition in Banking

Barone, Guglielmo ; Schivardi, Fabiano ; Sette, Enrico (2022) Interlocking Directorates and Competition in Banking. Bologna: Dipartimento di Scienze economiche, p. 67. ISBN 2282-6483. DOI 10.6092/unibo/amsacta/6951. In: Quaderni - Working Paper DSE (1173).
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Abstract

We study the effects on corporate loan rates of an unexpected change in the Italian legislation which forbade interlocking directorates between banks. Exploiting multiple firm-bank relationships to fully account for all unobserved heterogeneity, we find that prohibiting interlocks decreased the interest rates of previously interlocked banks by 16 basis points relative to other banks. The effect is stronger for high quality firms and for loans extended by interlocked banks with a large joint market share. Interest rates on loans from previously interlocked banks become more dispersed. Finally, firms borrowing more from previously interlocked banks expand investment, employment and sales.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Barone, GuglielmoUniversity of Bologna, Department of Economics0000-0001-5759-950X
Schivardi, FabianoLUISS University and EIEF0000-0001-7708-1011
Sette, EnricoBank of Italy
Keywords
Interlocking directorates, competition, banking
Subjects
ISBN
2282-6483
DOI
Deposit date
04 Jul 2022 08:59
Last modified
04 Jul 2022 09:00
Project name
ISEProD - Industrial Structure and the European Productivity Growth Divergence
Funding program
EC - H2020
URI

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