Bank Efficiency and Banking Sector Development: the Case of Italy

The paper illustrates the efficiency features of the Italian banking system through a review of the most important empirical studies over the last fifteen years. Particular emphasis is given to DEA (dynamic envelopment analysis) studies and to their capability to investigate economies of scale and geographical differences. The role of mergers — which are, as a matter of fact, a crucial feature of several systems, including Italy — is stressed. The Italian experience is compared to the one of old EU member countries. The paper concludes that there seem to be economies of scale at the beginning of the period, while they do not seem to characterize more recent years.