Bank Competition and Regulatory Reform: The Case of the Italian Banking Industry

The paper analyzes the evolution of competitive conditions in the Italian banking industry using firm-level balance sheet data for the period 1983-1997. Regulatory reform, large-scale consolidation, and competitive pressure from other European countries have changed substantially the banking environment, with potentially offsetting effects on the overall degree of competitiveness of the banking market. We find that competitive conditions, relatively unchanged until 1992, have improved substantially thereafter, with estimated mark-ups decreasing over the last five years of the sample period. Also, there is no evidence that banks involved in mergers and acquisitions gained market power; at the same time, however, they exhibit lower than average marginal costs. Finally, after controlling for various factors that may have determined the time pattern of banksÂ’ estimated mark-ups, we still detect a significant unexplained drop in our competitive conditions indicators after 1992. This is consistent with the hypothesis that the introduction of the Single Banking License in 1993 contributed to improve bank competition.bank competition, mergers and acquisitions, Lerner, consolidation

Did inflation really soar after the euro cash changeover? Indirect evidence from ATM withdrawals

The introduction of the euro notes and coins in the first two months of 2002 was followed by a lively debate on the alleged inflationary effects of the new currency. In Italy, as in the rest of the euro area, survey-based measures signaled a much sharper rise in inflation than measured by the official price indices, whose quality was called into question. In this paper we gather indirect evidence on the behavior of prices from the analysis of cash withdrawals from ATM and their determinants. Since these data do not rely on official inflation statistics, they provide an independent check for the latter. We present a model in which the relationship between aggregate ATM withdrawals and aggregate expenditure is not homogenous of degree one in the price level, a prediction which is strongly supported by the data. This feature allows us to test the hypothesis that, after the introduction of the euro notes and coins, consumer prices underwent an increase not recorded by official inflation statistics. We do not find evidence in support of this hypothesis.banknotes, currency, euro, inflation.

FIRM SIZE DISTRIBUTION: DO FINANCIAL CONSTRAINTS EXPLAIN IT ALL? EVIDENCE FROM SURVEY DATA

We address the question in the title using survey-based measures of financial constraints, as opposed to the proxies typically used in the literature. We find that in our dataset of Italian firms, those declaring to be financially constrained are smaller and younger than the others. However, the size distribution of non constrained firms is significantly skewed, and virtually overlaps with the FSD for the entire sample. Similar conclusions are drawn from the analysis of a large subsample comprising very young firms. These results are broadly confirmed using several non survey-based proxies of financial constraints, and over a second large sample including firms from OECD and non OECD countries. The analysis of the latter dataset suggests that financial constraints are a relatively more serious problem in developing countries. We conclude that financial constraints cannot be the main determinant of the FSD evolution over time, especially in financially developed economies.firm size distribution, financial constraints.

Bank competition and regulatory reform: the case of the Italian banking industry

This study analyzes the evolution of competitive conditions in the Italian banking industry using firm-level balance sheet data for the period 1983-1997. Regulatory reform, large-scale consolidation, and competitive pressure from other European countries have changed substantially the banking environment, with potentially offsetting effects on the overall degree of competition of the banking market. We find that competitive conditions, relatively unchanged until 1992, have improved substantially thereafter, with estimated mark-ups decreasing over the last five years of the sample period. Also, there is no evidence that banks involved in mergers and acquisitions gained market power; at the same time, however, they exhibit lower than average marginal costs. Finally, after controlling for various factors that may have determined the time pattern of banks’ estimated mark-ups, we still detect a significant unexplained drop in our competitive conditions indicators after 1992. This is consistent with the hypothesis that the introduction of the Single Banking License in 1993 contributed to improve bank competition.Bank supervision ; Banks and banking - Italy

Information uncertainty and the reaction of stock prices to news

Recent theoretical papers suggest that high uncertainty about firms’ economic prospects can explain delays in the adjustment of their stock prices to economic news. Using analyst forecast revisions and earnings announcements as proxies of news, we find mixed evidence in support of this hypothesis. We confirm that stocks of firms whose prospects are highly uncertain display a relatively large delayed price reaction (so-called continuation) after the release of news, but we argue that this evidence does not necessarily imply a slower adjustment speed. Indeed, for these stocks the immediate reaction to news is also relatively strong. In fact, the magnitude of the delayed price reaction (the price continuation) depends both on the degree of price sluggishness and on the “scale” of the news hitting the stock. We therefore consider both the delayed and immediate responses, and compute measures of adjustment speed that do not depend on the “scale” of the news. We then compare these measures across portfolios of stocks characterized by different degrees of uncertainty. Our findings indicate that: (i) stock prices characterized by high uncertainty tend to adjust to bad news more sluggishly than those characterized by low uncertainty; (ii) the opposite holds true in the case of good news; (iii) stock prices characterized by high uncertainty tend to adjust to bad news more sluggishly than to good news. Previous empirical literature focuses on price continuation patterns but neglects to control for the “scale” of the news, reaching erroneous conclusions.stock price continuation, price adjustment speed, news, earnings announcements, analysts forecasts, post-earnings announcement drift, post-analyst forecast revisions drift, managers incentives

L'influenza del diritto criminale bizantino nel Codice di Dušan. 1349-1354

THE INFLUENCE OF THE BYZANTINE CRIMINAL LAW IN THE CODE OF DUSAN. 1349-1354 Stefan Dušan enacted the Code of Dušan in 1349. Its dispositions must be considered in relation with two Byzantine compilations that constituted the imperiale tripartite codification: the so-called Law of Justinian and to the Abridged syntagma. The Byzantine juridical influence must be considered very relevant in criminal law: public pain system, legal action ex officio by state, pain of death, physical punishments and mutilations, were juridical concepts and institutions unknown to Slav people before their convert to Christianity, and their introduction must be connected to the Byzantine religious, cultural and juridical influence. Considering the difference with Slav customary law (even if some elements derivating from it were preserved) and the connections with Greek-Roman compilations it can be underlined Dušan’s attempt to create and introduce in his empire a Byzantine legal system.THE INFLUENCE OF THE BYZANTINE CRIMINAL LAW IN THE CODE OF DUSAN. 1349-1354 Stefan Dušan enacted the Code of Dušan in 1349. Its dispositions must be considered in relation with two Byzantine compilations that constituted the imperiale tripartite codification: the so-called Law of Justinian and to the Abridged syntagma. The Byzantine juridical influence must be considered very relevant in criminal law: public pain system, legal action ex officio by state, pain of death, physical punishments and mutilations, were juridical concepts and institutions unknown to Slav people before their convert to Christianity, and their introduction must be connected to the Byzantine religious, cultural and juridical influence. Considering the difference with Slav customary law (even if some elements derivating from it were preserved) and the connections with Greek-Roman compilations it can be underlined Dušan’s attempt to create and introduce in his empire a Byzantine legal system

L'influenza del diritto criminale bizantino nel Codice di Dušan. 1349-1354

THE INFLUENCE OF THE BYZANTINE CRIMINAL LAW IN THE CODE OF DUSAN. 1349-1354 Stefan Dušan enacted the Code of Dušan in 1349. Its dispositions must be considered in relation with two Byzantine compilations that constituted the imperiale tripartite codification: the so-called Law of Justinian and to the Abridged syntagma. The Byzantine juridical influence must be considered very relevant in criminal law: public pain system, legal action ex officio by state, pain of death, physical punishments and mutilations, were juridical concepts and institutions unknown to Slav people before their convert to Christianity, and their introduction must be connected to the Byzantine religious, cultural and juridical influence. Considering the difference with Slav customary law (even if some elements derivating from it were preserved) and the connections with Greek-Roman compilations it can be underlined Dušan’s attempt to create and introduce in his empire a Byzantine legal system.THE INFLUENCE OF THE BYZANTINE CRIMINAL LAW IN THE CODE OF DUSAN. 1349-1354 Stefan Dušan enacted the Code of Dušan in 1349. Its dispositions must be considered in relation with two Byzantine compilations that constituted the imperiale tripartite codification: the so-called Law of Justinian and to the Abridged syntagma. The Byzantine juridical influence must be considered very relevant in criminal law: public pain system, legal action ex officio by state, pain of death, physical punishments and mutilations, were juridical concepts and institutions unknown to Slav people before their convert to Christianity, and their introduction must be connected to the Byzantine religious, cultural and juridical influence. Considering the difference with Slav customary law (even if some elements derivating from it were preserved) and the connections with Greek-Roman compilations it can be underlined Dušan’s attempt to create and introduce in his empire a Byzantine legal system

Monetary Policy Rules for the Euro Area: What Role for National Information?

Using a simple multi-country econometric model covering the three main countries of the euro area, the paper focuses on the role that can be played by information at the national level in defining the monetary policy of the Union. We find that the performance of a central bank that chooses the nominal interest rate to minimize a standard quadratic loss function of area-wide inflation and output gap improves significantly if the reaction function includes national variables - as opposed to the case in which the interest rate reacts to area-wide variables only. Our results suggest that asymmetries within the euro area are relevant to the central bank; overall, we interpret them as making a case for exploiting the available national information in the conduct of the single monetary policy.monetary policy rules, Eurosystem

Monetary and macroprudential policies

We use a dynamic general equilibrium model featuring a banking sector to assess the interaction between macroprudential policy and monetary policy. We find that in "normal" times (when the economic cycle is driven by supply shocks) macroprudential policy generates only modest benefits for macroeconomic stability over a "monetary-policy-only" world. And lack of cooperation between the macroprudential authority and the central bank may even result in conflicting policies, hence suboptimal results. The benefits of introducing macroprudential policy tend to be sizeable when financial or housing market shocks, which affect the supply of loans, are important drivers of economic dynamics. In these cases a cooperative central bank will "lend a hand" to the macroprudential authority, working for broader objectives than just price stability in order to improve overall economic stability.macroprudential policy, monetary policy, capital requirements