Lessons from the Early Establishment of Banking Supervision in Italy (1926-1936)

Marco Molteni () and Dario Pellegrino
Additional contact information
Marco Molteni: Pembroke College, University of Oxford

No 48, Quaderni di storia economica (Economic History Working Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In this paper, we describe the establishment and assess the relevance of banking supervision in Italy between 1926 and 1936. This case is particularly interesting from the international perspective, Italy having been the first European country to assign substantial supervision to its central bank, a few years before the 1929 crisis. Notwithstanding insufficient regulation and a light touch concerning the four major mixed banks, we document considerable enforcement of the law, which went beyond the initial provisions, thanks to the rather proactive supervisory approach adopted by the Bank of Italy. We point out a significant impact on the banking system: systematic archival analysis reveals that supervision fostered capital accumulation and mitigated lending concentration. Preliminary evidence suggests that supervision information enhanced effective lending of last resort during the crisis. Our educated guess is that, in the absence of the new supervisory set-up, the severity of the financial turmoil in the early 1930s in Italy would have been much fiercer, especially for small and medium-sized banks.

Keywords: banking supervision; capital requirements; banking history; lending of last resort (search for similar items in EconPapers)
JEL-codes: N20 N24 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-his, nep-mon and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bancaditalia.it/pubblicazioni/quaderni ... .htmlpage.language=1 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:workqs:qse_48

Access Statistics for this paper

More papers in Quaderni di storia economica (Economic History Working Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().