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

Author

Listed:
  • Elisabetta Montanaro

    (University of Siena)

  • Mario Tonveronachi
Abstract
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 euro 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.

Suggested Citation

  • Elisabetta Montanaro & Mario Tonveronachi, 2017. "Vulnerabilita' del sistema bancario italiano. Diagnosi e rimedi (Dealing with the vulnerability of the Italian banking system)," Moneta e Credito, Economia civile, vol. 70(280), pages 299-368.
    • Handle: RePEc:psl:moneta:2017:42
    as

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    File URL: http://ojs.uniroma1.it/index.php/monetaecredito/article/view/14163/13895
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Salvatore Maccarone, 2018. "Note a margine di un saggio di Montanaro e Tonveronachi," Moneta e Credito, Economia civile, vol. 71(282), pages 139-144.
    2. Marco Onado, 2018. "Commento a Montanaro e Tonveronachi," Moneta e Credito, Economia civile, vol. 71(282), pages 119-128.
    3. Carlo D'Ippoliti, 2017. "Editoriale. I problemi delle banche vanno molto oltre le mele marce (Editorial. Italy's banks problems run deeper than NPLs)," Moneta e Credito, Economia civile, vol. 70(280), pages 293-297.
    4. Vito Meli, 2018. "Problemi e prospettive del sistema bancario italiano," Moneta e Credito, Economia civile, vol. 71(282), pages 145-149.
    5. Guido Traficante & Guglielmo Forges Davanzati, 2018. "La restrizione del credito in uno schema di teoria monetaria della produzione: il caso italiano," Moneta e Credito, Economia civile, vol. 71(283), pages 211-233.
    6. Roberta Arbolino & Raffaele Boffardi & Konstantinos Kounetas & Ugo Marani & Oreste Napolitano, 2024. "Are There Conditions That Can Predict When an M&A Works? The Case of Italian Listed Banks," Economies, MDPI, vol. 12(3), pages 1-33, February.

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    More about this item

    Keywords

    Banks; NPLs; viability; regulation; supervision; Italy;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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