RESHAPING COMMERCIAL BANKING IN ITALY: NEW CHALLENGES FROM LENDING TO GOVERNANCE


di: Fondazione Rosselli
a cura di: Giampio Bracchi, Donato Masciandaro

Editore
Edibank
Anno
2014
Pagine
304
ISBN
978-88-449-0521-7
Disponibilità
Disponibile
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Presentazione

In the coming months the European scenario will be characterized at least by three features: weak growth, high liquidity, and a new supervisory architecture (Single Supervisory Mechanism). In such an environment which will be the perspectives for the Italian commercial banks? Which are the potential drivers of banking efficiency and profitability? Will the Banking Union contribute to the stability and growth?
 

The 19th Report on the Italian Financial System investigates key issues in two broad areas of research: banking and governance. In the Part One, the Report offers new empirical results on the evolving relationships between banks, firms and retail customers, with a special focus on lending, both at the micro and macro level.
 
In this regard, the authors explore:
  • the banking profitability indexes in the European context;
  • the bank loan supply to the SMEs in Europe;
  • the credit lending to Italian SMEs and the factors of reduction;
  • the relationship between banks’ performance and localism effects;
  • the local banking, proxied by the BCC role, and the economic growth;
  • the local conditions, in particular in the South of Italy, and the risk assumption of the banks;
  • the degree of banking penetration in Italy over the last 15 years;
  • the retail banking after the Great Crisis and new strategies;
  • the private banking in Italy and the entrepreneurial system.
 
Then the Part Two presents new empirical and institutional insights on crucial features in the regulatory, supervisory and corporate governance settings. In particular, the Report analyses:
  • the systemic risk of European financial system over the period 2006-2012;
  • the banks reserving behavior and their opacity;
  • the role played by independent directors and governance ratings;
  • the credibility of European banks’ risk-weighted capital;
  • the banking governance and the new EU supervision.
 
In conclusion, profitability and governance represent the two pillars to build the transformation of the Italian banks into European ones. The Italian banking system has to be able to count on effective supervision in order to best face the questions that have become inevitable for any board of directors: how to increase productivity vis-à-vis a drop in profitability? Is governance setup the most appropriate for the job? At the same time, however, without equal rules and homogeneous supervision, even appropriate and courageous corporate efforts run the risk of dissipating their potential effectiveness.

THE ITALIAN BANKING SYSTEM BETWEEN PROFITABILIT Y AND GOVERNANCE
1. Introduction
2. The Eu economic scenario
3. The Italian banking industry: the challenges of profitability and governance
4. The banking union kick-off: the challenges in regulation and supervision
Part 1 - BANKING
 
THE PROFITABILITY OF THE EUROPEAN BANKING SYSTEMS: A CONVERGENT TAPERING
1. Introduction 
2. The dataset 
3. Banking profitability indexes 
3.1 Net interest margin 
3.2 Provision per total assets 
3.3 Operating profits per total assets 
3.4 Return on assets 
3.5 Administrative costs and staff expenses over total expenses 
3.6 Cost to income ratio 
3.7 Return on equity 
4. Conclusion 
References
BANK LENDING TECHNOLOGIES AND SME CREDIT RATIONING IN EUROPE IN THE 2009 CRISIS
1. Introduction 
2. Literature review 
3. Data and methodology
3.1 Empirical methodology and data description 
3.2 Lending technology indices 
3.3 Credit rationing, soft information and control variables
3.4 Hypotheses to be tested 
4. Results 
5. Conclusions 
Appendix - Survey questions
References
BANK CREDIT LENDING TO SMALL AND MEDIUM ENTERPRISES: WAS THERE A CREDIT CRUNCH IN ITALY?
1. Italian companies and access to credit 
2. Sample and methodology
3. Results
4. Conclusions
References
BANKS’ PERFORMANCE AND LOCALISM EFFECTS IN THE ITALIAN BANKING SYSTEM
1. Introduction 
2. Literature review 
2.1 Determinants of bank profitability 
2.2 Macroeconomic determinants of bank profitability 
3. Sample and data 
4. Methodology 
5. Empirical results 
5.1 Determinants of bank profitability 
5.2 “Localism” effects on bank profitability 
6. Conclusions 
References
LOCAL ECONOMIC GROWTH AND LOCAL BANKING IN ITALY: THE ROLE OF LOCAL BANKS IN DEVELOPMENT
1. Introduction 
2. Some literature about banking activity and growth 
3. The data 
4. Econometric results 
5. Productive environment and infrastructures 
6. Small and cooperative banks 
7. Conclusions 
References
LOCAL BANKS AND CREDIT: FROM CRISIS TO THE NEW REGULATORY PROPOSALS FOR THE DEVELOPMENT OF LENDING POLICIES IN FAVOUR OF THE REAL ECONOMY
1. Introduction 
2. The effects of the crisis on Ialian banks 
2.1 The supply and quality of credit to customers 
2.2 The importance of dimensional factors 
3. The importance of enviromental factors: an empirical analysis 
4. Conclusions 
References 
BANK NETWORKS: 2020 BRANCH PLAN
1. Introduction and literature review 
2. Branches in Italy: an intertemporal analysis 
3. Bank networks: 2020 branch plan 
References
RETAIL BANKS: WHY DO THEY STAND BETWEEN CAPITAL AND STRATEGY?
1. Introduction 
2. Banks’ challenges 
3. What does having a strategy mean?
3.1 The next steps in banks’ strategies 
4. Retail banks’ strategies: an outlook of the world’s largest banks
5. Conclusions and suggestions
References
PRIVATE BANKING AND ENTREPRENEURIAL SYSTEM
1. Private banking
1.1 Private banking: definitional aspects and characteristics 
1.2 Demand analysis: the private customer
1.3 Offer analysis: main sector intermediaries
1.4 Italian private banking market: an introduction
2. The relationship between private bank, entrepreneur and firm 
2.1 Corporate finance activity
2.2 Investment banking activity 
3. The empirical analysis: the Province of Varese 
3.1 The topics under investigation 
3.2 The research methodology 
3.3 The results of the analysis 
4. Final considerations 
References
Part 2 - PRIVATE AND PUBLIC GOVERNANCE
 
SYSTEMIC RISK OF EUROPEAN BANKS OVER THE PERIOD 2006-2012
1. Literature review: definition and measures of systemic risk 
2. Data and methodology 
2.1 Time-varying VaR, CoVaR and market variables 
2.2 Banks balance sheets explanatory variables 
3. Empirical results 
4. Conclusions 
References 
BANKS RESERVING BEHAVIOR AND THEIR OPACITY
1. Introduction and motivation 
2. Accounting standards and regulatory guidance on credit impairments 
3. Empirical framework and data 
3.1 Discretionary provisioning 
3.2 Delays in loss recognition 
3.3 Bank opacity 
3.4 The regression model 
3.5 Data and descriptive statistics 
4. Results 
4.1 Unexplained loan loss provision and bank opacity 
4.2 Delays in loss recognition and bank opacity 
5. Conclusions
Appendix – Variable definitions
References
INDEPENDENT DIRECTORS AND GOVERNANCE RATINGS: EVIDENCE FROM ITALIAN LISTED COMPANIES
1. Introduction
2. Literature review
3. The Ftse Ecpi Italia Sri Benchmark Index and our test hypotheses
4. Data and methodology 
5. Results 
6. Conclusions 
References 
THE CREDIBILITY OF EUROPEAN BANKS’ RISK-WEIGHTED CAPITAL: STRUCTURAL DIFFERENCES OR NATIONAL SEGMENTATIONS?
1. Introduction 
2. B ackground and related literature 
3. Data sources and sample description 
4. Main results 
4.1 Univariate analysis 
4.2 Multivariate analysis 
5. Final remarks
References
BANKING GOVERNANCE AND THE NEW EU SUPERVISION
1. Introduction 
2. The financing crisis and the deficiencies in the governance of banks
3. The provisions of the Bank of Italy 2008-2014 and the Guidelines on internal governance of the Eba
4. The prohibition on interlocking: the domestic rules and the requirements introduced by Crd IV
5. The whistle-blowers
6. I ntervention by Crd IV on remuneration policies and practices of managers
7. The new incoming tools: the pecuniary sanctions
8. The penalty measures regarding governance and the coming of the Brrd
9. The breakdown of tasks between the Ecb and Ncas in the Single Supervisory Mechanism regarding banking governance measures
10. A problematic conclusion: how much does the model of banks differ from the model of common limited public companies (“società per azioni”)?
References 
ABOUT THE AUTHORS