The Curious Case of Italian Interlocking Directorates

In this paper, we provide an overview of the Italian legislation on interlocking directorates and its enforcement in the last decade. Italy is the only EU Member State to have introduced a specific anti-interlocking provision aimed at promoting competition in the banking, insurance, and financial sectors. After explaining why, without any regulation, these personal ties may facilitate or reinforce the achievement of a collusive or quiet life equilibrium among competitors, we attempt to evaluate the effectiveness and limits of the Italian interlocking ban at reducing interlocking directorates among competing firms. Using the banking sector as a case study, we gathered data on the number of interlocking directorates that persist among Italian banks and banking groups at the end of 2019. The result of our study is that interlocking directorates among major Italian banks seem to have completely disappeared. We then consider some empirical studies that, consistently with our finding, show that in the period following the entry into force of the interlocking ban, bank lending rates have fallen, indicating more vigorous competition in the banking sector. We conclude our paper questioning whether the 2011 Italian interlocking ban has had any effect on the ownership structure of the relevant market players, for instance contributing to the disposal of minority and cross-shareholdings held by competing companies, and on the composition of their governing bodies