Debt Restructuring with Multiple Bank Relationships

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. AbstractWhen the debt of firms in distress is dispersed, a restructuring agreement is difficult to reach because of free riding. We develop a repeated game in which banks come across each other frequently, allowing them to threaten a punishment in case of free riding. As the number of lending banks grows, the chance of meeting again a bank and of being punished for free riding increases, improving the likelihood of cooperation. Looking at Italian firms in distress, we find that the restructuring probability increases with the number of banks up to a threshold -three banks -beyond which coordination problems prevail. JEL: G21, G33

Are There Conditions That Can Predict When an M&A Works? The Case of Italian Listed Banks

“…There are currently 29 listed banks on the stock exchange out of a total of 493 (enrolled in the Register of Italian banks), in turn clustered into 53 banking groups (Bank of Italy 2019b). In order to solve the low level of concentration and overcapacity, some of the listed banks have launched a growth and aggregation process by implementing M&As (Baglioni et al 2018) 1 . Due to the lack of available data, we considered 14 banks listed before 2010 that undertook the M&A process from 2010 to 2016.…”