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Bad loans and de novo banks: evidence from Italy

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  • Rachele Anna Ambrosio

    (Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno)

  • Paolo Coccorese

    (Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno)

Abstract

The existing empirical evidence suggests that there is a “winner’s curse” for banks entering new markets. Actually, it has been assessed that de novo banks generally experience higher bad loans rates than mature banks for about ten years. We investigate whether this persistence has characterized the Italian banking industry in the period 1995-2010, and find that theory predictions are confirmed by empirical results. This evidence is robust to different model specifications. We also show that cooperative credit banks (CCBs) perform better than the others banks, due to their focus on local markets.

Suggested Citation

  • Rachele Anna Ambrosio & Paolo Coccorese, 2014. "Bad loans and de novo banks: evidence from Italy," Working Papers 3_233, Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno.
    • Handle: RePEc:sep:wpaper:3_233
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    Cited by:

    1. Russell Kashian & Robert Drago, 2017. "Minority-Owned Banks and Bank Failures After the Financial Collapse," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(1), pages 5-36, February.
    2. Cristian Barra & Nazzareno Ruggiero, 2022. "Firm innovation and local bank efficiency in Italy: Does the type of bank matter?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 1083-1128, December.

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    More about this item

    Keywords

    Banking; Competition; Market structure; Conduct;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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