Evaluating the effectiveness of the Italian interlocking ban: an empirical analysis of the personal ties among the largest banking and insurance groups in Italy

Ghezzi, Federico; Picciau, Chiara

In 2011, Italy introduced a ban on interlocking directorates in the financial
sector, prohibiting members of the boards of directors and of the internal control
bodies, as well as top managers of banking, insurance, and financial companies,
from holding any such office in a competing company or group. Empirical
studies have demonstrated conflicting results concerning the effectiveness of
the Italian anti-interlocking provision. Some studies claim that interlocking
directorates have decreased but have not been completely eliminated, which
suggests possible persisting limits to competition. Other studies instead show
the ban to have a procompetitive effect, at least in the banking sector, which
would be at odds with a slight reduction in personal ties. Our article addresses
this inconsistency by mapping the interlocking directorates among the 25 largest
banking groups and the 25 largest insurance groups operating in Italy before and
after the introduction of the ban. We show that although interlocking directorates
were widespread at the end of 2010, the interlocking ban reached its goal in
the banking and insurance sectors. Anticompetitive effects may, however, still
exist, especially considering that the anti-interlocking provision does not affect
ownership connections among competing financial companies and groups.