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markets are mainly local. therefore, m & as involving banks with large market shares might cause adverse price changes, harming consumers. second, m & as might distract some participants from small business lending, which relies on soft information at local level, to less custom - made products that are more easily manageable within large organisations, as i will elaborate on a little later. third, depending on the type of business and geography, bank m & as could harm bank customers by reducing competition. therefore, since bank m & as affect not only banks themselves but also their customers, quantifying the efficiency gains becomes difficult. an important first step towards analysing some potential externalities to the bank customers is to assess the value created for bank shareholders and depositors. this is what i am going to do now. later on, i will analyse the impact of bank m & as on the financing of small firms and on entrepreneurship. focarelli, panetta, and salleo ( 2002 ). jensen and ruback ( 1983 ). see amel, barnes, panetta and salleo ( 2004 ). 4. creating value for shareholders the main message from the academic literature is that banking consolidation is beneficial up to a relatively small size, but there is little evidence that mergers yield economies of scope or gains in managerial efficiency. 7 however, value creation from bank mergers and acquisitions has improved over time, possibly because such activities are complex and because lessons have been learnt. 8 moreover, most of the estimated value gains from bank mergers stem from cutting costs by eliminating overlaps and consolidating backroom operations. 9 in addition, mergers that focus both on activity and geography enhance shareholder value. 10 with respect to risk, there is evidence that m & as reduce bank risk. the evidence indicates that the primary determinants in bank risk reduction comes from diversification gains, gains associated with achieving too - big - to - fail status, and, to a lesser degree, synergy gains. 11 5. implications of mergers and acquisitions for small and medium - sized enterprises now let me turn to some of the social benefits and costs stemming from banking consolidation, in particular with respect to the financing of small firms and entrepreneurship. banking consolidation through bank m & as implies a reduction in the number of banks and an increase in bank size. this can have repercussions on the access to credit for small and new firms since bank m & as change bank efficiency and competition, but it also changes the way