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How slow is the recovery of loans to firms in Italy?

Author

Listed:
  • Ginette Eramo

    (Bank of Italy)

  • Roberto Felici

    (Bank of Italy)

  • Paolo Finaldi Russo

    (Bank of Italy)

  • Federico Signoretti

    (Bank of Italy)

Abstract

This paper studies the characteristics of the recent evolution of loans to non-financial firms in Italy from an historical perspective, with the aim of ascertaining whether the ongoing recovery is creditless; the main demand- and supply-side determinants of credit are also discussed. We find the following results. First, bank loan dynamics have been weak compared to the universe of recoveries in 13 euro-area countries since 1980; however, credit has evolved in line with the median pattern in the restricted sample of recoveries following deep and long recessions and/or recessions associated with banking crises. Second, the reduction in loans has been common to firms of all sizes, though it has been more pronounced for smaller ones. Third, based on a review of credit market indicators, survey evidence and econometric studies, the weakness of lending to firms has been in line with subdued dynamics of demand; the stringency of lending criteria has also contributed, in particular for smaller and riskier firms.

Suggested Citation

  • Ginette Eramo & Roberto Felici & Paolo Finaldi Russo & Federico Signoretti, 2018. "How slow is the recovery of loans to firms in Italy?," Questioni di Economia e Finanza (Occasional Papers) 469, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_469_18
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    References listed on IDEAS

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    Cited by:

    1. Finaldi Russo, Paolo & Nigro, Valentina & Pastorelli, Sabrina, 2024. "Bank lending to small firms: Metamorphosis of a financing model," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 13-31.
    2. Paolo Finaldi Russo & Fabio Parlapiano & Daniele Pianeselli & Ilaria Supino, 2020. "Firms’ listings: what is new? Italy versus the main European stock exchanges," Questioni di Economia e Finanza (Occasional Papers) 555, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    creditless recovery; credit demand; credit supply; small firms financing;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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