Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)

<p>The major vulnerabilities of the Italian banking system are the overhang of NPLs and low profitability. Differently from the attention given to excesses of NPLs, the profitability problem is normally considered to be a matter to be left to bank management and not an area of explicit direct...

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Main Authors: Elisabetta Montanaro, Mario Tonveronachi
Format: Article
Language:Italian
Published: Associazione Economia civile 2017-12-01
Series:Moneta e Credito
Subjects:
Online Access:http://ojs.uniroma1.it/index.php/monetaecredito/article/view/14163
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spelling doaj-78ab09736afa40e68cc7a08501b3f0fa2020-11-24T23:57:49ZitaAssociazione Economia civileMoneta e Credito2037-36512017-12-017028029936813679Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)Elisabetta Montanaro0Mario TonveronachiSapienza University of Rome<p>The major vulnerabilities of the Italian banking system are the overhang of NPLs and low profitability. Differently from the attention given to excesses of NPLs, the profitability problem is normally considered to be a matter to be left to bank management and not an area of explicit direct regulatory action. Although focusing on capital requirements, regulators and supervisors seldom pose the question of where capital comes from. Using a large sample of 410 Italian domestic banking groups and individual banks, we propose an NPL stress test and a viability test that show: that the system’s vulnerability is a widespread phenomenon; that a further recapitalisation of around ten billion euros is necessary; and that, more importantly, limiting interventions to the overhang problem does not put the majority of Italian banks into a viability path due to the inefficiencies coming from their current business models. The analysis of the Italian case strengthens the critique of current regulation and supervision because, not focusing on bank profitability, they do not avoid threats on solvency coming from the accumulation of NPLs.  We thus argue that the structural changes necessary to put the Italian banking system into a viable path require new regulatory and supervisory approaches.</p><p> JEL codes: G01, G20, G28, G32</p><p> </p>http://ojs.uniroma1.it/index.php/monetaecredito/article/view/14163banks, NPLs, viability, regulation, supervision, Italy
collection DOAJ
language Italian
format Article
sources DOAJ
author Elisabetta Montanaro
Mario Tonveronachi
spellingShingle Elisabetta Montanaro
Mario Tonveronachi
Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
Moneta e Credito
banks, NPLs, viability, regulation, supervision, Italy
author_facet Elisabetta Montanaro
Mario Tonveronachi
author_sort Elisabetta Montanaro
title Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
title_short Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
title_full Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
title_fullStr Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
title_full_unstemmed Vulnerabilità del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)
title_sort vulnerabilità del sistema bancario italiano. diagnosi e rimedi (dealing with the vulnerability of the italian banking system)
publisher Associazione Economia civile
series Moneta e Credito
issn 2037-3651
publishDate 2017-12-01
description <p>The major vulnerabilities of the Italian banking system are the overhang of NPLs and low profitability. Differently from the attention given to excesses of NPLs, the profitability problem is normally considered to be a matter to be left to bank management and not an area of explicit direct regulatory action. Although focusing on capital requirements, regulators and supervisors seldom pose the question of where capital comes from. Using a large sample of 410 Italian domestic banking groups and individual banks, we propose an NPL stress test and a viability test that show: that the system’s vulnerability is a widespread phenomenon; that a further recapitalisation of around ten billion euros is necessary; and that, more importantly, limiting interventions to the overhang problem does not put the majority of Italian banks into a viability path due to the inefficiencies coming from their current business models. The analysis of the Italian case strengthens the critique of current regulation and supervision because, not focusing on bank profitability, they do not avoid threats on solvency coming from the accumulation of NPLs.  We thus argue that the structural changes necessary to put the Italian banking system into a viable path require new regulatory and supervisory approaches.</p><p> JEL codes: G01, G20, G28, G32</p><p> </p>
topic banks, NPLs, viability, regulation, supervision, Italy
url http://ojs.uniroma1.it/index.php/monetaecredito/article/view/14163
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AT mariotonveronachi vulnerabilitadelsistemabancarioitalianodiagnosierimedidealingwiththevulnerabilityoftheitalianbankingsystem
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