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During the 1990s, the banking sector experienced an important consolidation process in most developed countries, where mergers and acquisitions (M&As) between credit institutions reached unprecedented levels. Financial deregulation and technological progress have played an important role in this process (Berger, Demsetz & Strahan 1999). These, among other factors, may have intensified the synergy derived from size and facilitated an improvement in the management of the acquired institutions. In order to evaluate the importance of these two factors, we carry out a multinomial logit analysis of the characteristics of continental European financial institutions prior to their participation in merger and/or acquisition operations between 1995 and 2001. Our results demonstrate that size is an important factor in mergers and acquisitions, but it is not clear that economies of scale are sought with these types of deals. In turn, improving the management of the acquired institutions has played an important role in this process.

The objective of this paper is to review Spanish regulatory evolution in the collective investment area, which is very recent in its principal aspects.

The paper assesses the way investment funds are impacted by the Markets in Financial Instruments Directive (MiFID) and the Spanish legislation.

The legal aspect of the Collective investment institutions (CII) in Spain has experienced a major renovation over the past four years. There were three basic principles: increased flexibility of the CIIs' regime, reinforced protection for investors, and improved administrative intervention regime. Although MiFID focuses its attention on financial markets and investment firms, it also implies an important change for collective investment institutions. New conditions arising after the introduction of this norm are imposing major challenges for financial entities, supervisory authorities and financial markets.

The unified regulatory system, even after the implementation of MiFID, remains fragmented, and the way in which it will apply to investment funds is not easy to disentangle.

As a result of this process, it is hoped that levels of competitiveness will increase and transaction costs fall, which will ultimately result in improved conditions for investors and more efficient companies.

The paper establishes the implications of the MiFID and the UCITS Directives for the investment fund industry in Spain.