Sustainable Disclosure Policies and Sustainable Performance of European Listed Companies

This article belongs to the Special Issue Financial Markets, Instruments and Intermediaries for Social, Environmental and Fiscal Sustainability.Sustainable disclosure has become common for companies to publicly signal their responsible behavior. Our research idea is twofold. First—irrespective of its content—better quality sustainable disclosure should identify more sustainability compliant companies. Second, we propose that those companies should have a more stable—and thus more sustainable—performance. Focusing on the top-capitalized companies of the EU-28 stock exchanges, we assess how GRI sustainable-reporting quality associates with stock-price volatility and distance-to-default. Our results, which resist various robustness checks, confirm that better quality sustainable disclosure couples with more sustainable performance. Thus, pro-disclosure policies could enhance long-term value creation

Is the Traditional Banking Model a Survivor?

We test whether small US commercial banks that use a traditional business model are more likely to survive than non-traditional banks during both good and bad economic climates. Our concept of bank survival is derived from Stigler (1958) and includes any bank that does not fail or is not acquired. We define traditional banking by four hallmark characteristics: Relationship loans, core deposit funding, revenue streams from traditional banking services, and physical bank branches. Banks that adhered more closely to this business strategy were an estimated 8 to 13 percentage points more likely to survive from 1997 through 2012 compared to other small banks using less traditional business strategies. This survival advantage approximately doubled during the financial crisis period

Macro Financial Determinants of the Great Financial Crisis: Implications for Financial Regulation

By analysing the macro financial determinants of the Great Financial Crisis of 2007-2009 on 83 countries, we find that the probability of suffering the crisis in 2008 was larger for countries having higher levels of credit deposit ratio whereas it was lower for countries having higher levels of: i) net interest margin, ii) concentration in the banking sector, iii) restrictions to bank activities, iv) private monitoring. Our findings contribute to the ongoing discussion that can help policymakers calibrate new regulation, by achieving a reasonable trade-off between financial stability and economic growth

Macro Financial Determinants of the Great Financial Crisis: Implications for Financial Regulation

By analysing the macro financial determinants of the Great Financial Crisis of 2007-2009 on 83 countries, we find that the probability of suffering the crisis in 2008 was larger for countries having higher levels of credit deposit ratio whereas it was lower for countries having higher levels of: i) net interest margin, ii) concentration in the banking sector, iii) restrictions to bank activities, iv) private monitoring. Our findings contribute to the ongoing discussion that can help policymakers calibrate new regulation, by achieving a reasonable trade-off between financial stability and economic growth

La riduzione dei tassi a lungo termine: una tendenza strutturale

Un'analisi dell’andamento dei tassi di interesse a lungo termine mostra che, sia negli Stati Uniti sia nell’area dell’euro, il calo degli ultimi anni fa parte di un trend di lungo periodo, iniziato molto prima dello scoppio della crisi finanziaria. Questo andamento sembra influenzato dalla discesa del tasso di rendimento reale atteso, spinto al ribasso dalla caduta del tasso di interesse naturale. Allo stesso modo, le riduzioni sia del tasso d’inflazione atteso sia del premio per il rischio d’inflazione hanno contribuito ulteriormente a rafforzare il trend. Visto che questi fattori si muovono lentamente, tassi di interesse a lungo termine bassi potrebbero continuare a caratterizzare lo scenario macro negli Stati Uniti e nell’area dell’euro anche nei prossimi anni, con importanti conseguenze per la gestione della politica monetaria e per l’attività delle banche

Rating Performance and Bank Business Models: Is There a Change with the 2007–2009 Crisis?

We investigate the relationship between a bank’s rating and its business model and hypothesize that relationship changed through the crisis. We use bank ratings by Fitch, Moody’s and S&P’s from 2006 to 2009 and proxy the business model via an index given by a banks’ traditional income share in total income. In a sample of 241 listed banks from 39 countries, controlling for sovereign ratings and other bank characteristics, we find that banks with higher values of the index had: (1) similar ratings to other banks until 2007; (2) better rating performance through 2008–2009. The evidence supports our hypothesis

Rating delle banche e modello di business: quali lezioni dalla crisi?

La crisi finanziaria ha stimolato, in ambito internazionale, numerose ricerche sul legame tra modello di rischio e business evidenziando come i sistemi bancari con una maggiore redditività derivante dall'attività tradizionale abbiano avuto minori probabilità di crisi.Tale ipotesi è confermata da un'analisi condotta su un campione di 106 banche attive in Europa, Stati Uniti e Giappone, considerando i rating emessi nel 2006 dalle principali agenzie e la Ioro variazione da allora al 2011 . I risultati evidenziano che fino al 2006 i mercati finanziari, attraverso le agenzie di rating, hanno contribuito a incoraggiare scelte verso modelli di business più rischiosi mentre la crisi ha spinto le banche a tornare a modelli di business tradizionali. Uno scenario positivo per le banche italiane, in attesa che anche la regolamentazione finanziaria rifletta maggiormente tale aspetto

Economic Activity and Credit Market Linkages: New Evidence from Italy

We investigate the interactions between the real economy and credit markets in Italy, focusing in particular on how the business cycle influences the risks of the banks’ loan portfolio (i.e., the real effect), and in turn how the credit market affects the real economy (i.e., the credit supply effect). We find evidence of both effects, with the former conveyed primarily by the creditworthiness of large firms. Moreover, we disentangle credit supply shocks due to factors inside the banking sector (the bank lending channel) from those outside the banking sector (the borrower’s balance-sheet channel), and find that both channels have a negative and significant effect on gdp growth

Lending quality and contracts enforcement reforms

We investigate the causal relationship between the efficiency of country's judicial system and the quality of bank lending, using the contracts enforcement reforms implemented in four European countries as a quasi-natural experiment. We find that strengthening contracts enforcement determines large, significant and persistent reductions in banks' nonperforming loans. Our results have important policy implications: they point at judicial efficiency as a critical determinant of the stability of the banking sector and its resilience to adverse shocks such as the recent Covid-19 pandemic