Getting organized to lend in a period of crisis: findings from a survey of Italian banks

Silvia Del Prete (), Marcello Pagnini (), Paola Rossi and Valerio Vacca
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Silvia Del Prete: Banca d'Italia

No 154, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper analyses how banks organize their lending activity by using the results of two surveys carried out in 2006 and in 2009. During this period, the use of rating and scoring methodologies became more widespread even among the smaller banks. Larger banks used these techniques more frequently when pricing their loans, while the importance of ratings in deciding whether to grant a loan in the first place declined. Smaller banks continued to use ratings in a flexible way. In the wake of the crisis banks gave more importance to both hard and soft types of information and increased their guarantee requirements. The trend towards decentralizing decision-making seems to have halted and the average tenure of branch managers has shortened. These managers have mandates that are frequently correlated with the ratings, while pay incentives have not changed substantially. In brief, the 2008-09 recession in some cases contributed to the acceleration of reorganization processes already under way, in others however it altered their direction.

Keywords: banking organization; lending techniques; financial crisis (search for similar items in EconPapers)
JEL-codes: G21 L15 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-ban
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