IMF Working Papers

Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk

ByGianni De Nicolo, Mary G Zephirin, Philip F. Bartholomew, Jahanara Zaman

July 1, 2003

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Gianni De Nicolo, Mary G Zephirin, Philip F. Bartholomew, and Jahanara Zaman. "Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk", IMF Working Papers 2003, 158 (2003), accessed 12/7/2025, https://doi.org/10.5089/9781451857603.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper documents global trends in bank activity, consolidation, internationalization, and financial firm conglomeration, and explores the extent to which financial firm risk and systemic risk potential in banking are related to consolidation and conglomeration. We find that while there is a substantial upward trend in conglomeration globally, consolidation and internationalization exhibit uneven patterns across world regions. Trends in consolidation and conglomeration indicate increased risk profiles for large, conglomerate financial firms, and higher levels of systemic risk potential for more concentrated banking systems. We outline research directions aimed at explaining why bank consolidation and conglomeration do not necessarily yield either safer financial firms or more resilient banking systems.

Subject: Bank deposits, Banking, Commercial banks, Emerging and frontier financial markets, Financial institutions, Financial markets, Financial sector policy and analysis, Financial services, Insurance companies, Systemic risk

Keywords: Africa, Bank Consolidation, Bank deposits, banking firm, banking system, choice of return, Commercial banks, conglomerate firm, Conglomeration, Eastern Europe, Emerging and frontier financial markets, emerging market, expansion of the scope, financial firm, Financial Risk, five-firms concentration ratios, Global, Insurance companies, Internationalization, investment strategies, Middle East, probability of failure, return on assets, risk profile, risk taking, risk-taking choice, Systemic risk, Western Europe, WP

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