The article analyses the role of local banks in Italy during the 2008–2009 crisis from the perspective of the relationship lending model. During the crisis, the risk of cascading failures of financial organizations has dramatically increased, thus causing a return of attention to local banking as a possible source of countercyclical behaviours in the financial markets thanks to their ability to establish fiduciary long-term relationships with small businesses. The purpose of this article is to test this hypothesis and to disentangle the response of local banks during the financial turmoil according to their governance structure and location. Our results show that non-independent local banks and, to a limited extent, cooperative banks located in the rural area actually played a significant countercyclical role across the crisis. Policy implications suggest that prudential supervision should rethink the indicators of systemic risk in order to differentiate banks according to their capability of mitigating it

Pedrini, G., Manitiu, D. (2017). The countercyclical role of Italian local banks during the financial crisis. APPLIED ECONOMICS, 49(27), 2679-2696 [10.1080/00036846.2016.1245840].

The countercyclical role of Italian local banks during the financial crisis

PEDRINI, GIULIO
;
2017

Abstract

The article analyses the role of local banks in Italy during the 2008–2009 crisis from the perspective of the relationship lending model. During the crisis, the risk of cascading failures of financial organizations has dramatically increased, thus causing a return of attention to local banking as a possible source of countercyclical behaviours in the financial markets thanks to their ability to establish fiduciary long-term relationships with small businesses. The purpose of this article is to test this hypothesis and to disentangle the response of local banks during the financial turmoil according to their governance structure and location. Our results show that non-independent local banks and, to a limited extent, cooperative banks located in the rural area actually played a significant countercyclical role across the crisis. Policy implications suggest that prudential supervision should rethink the indicators of systemic risk in order to differentiate banks according to their capability of mitigating it
Articolo in rivista - Articolo scientifico
local banks, financial crisis, relationship lending, credit supply
English
2017
49
27
2679
2696
open
Pedrini, G., Manitiu, D. (2017). The countercyclical role of Italian local banks during the financial crisis. APPLIED ECONOMICS, 49(27), 2679-2696 [10.1080/00036846.2016.1245840].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/132946
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