Evaluating the Effectiveness of the Italian Interlocking Ban: An Empirical Analysis of the Personal Ties Among The Largest Banking and Insurance Groups in Italy

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.