Risk and regulation: A difference-in-differences analysis for Italian local banks

Cristian Barra, Sergio Destefanis and Giuseppe Lubrano Lavadera

Finance Research Letters, 2016, vol. 17, issue C, 25-32

Abstract: Using a directional DEA model we analyse the impact of the 2008 financial crisis in a sample of Italian local banks. We rely on a novel data-set, where the banks’ economic environment is measured at a territorially very disaggregated level. The efficiency of cooperative banks deteriorates in the crisis relatively to the other banks, unless we include indicators of territorial diversification and local economic performance in the banks’ production set. This evidence is in line with the bad luck hypothesis, and implies that strict branching regulations had a harmful impact on bank efficiency.

Keywords: Technical efficiency; Directional distance functions; Geographic diversification; Cooperative banks (search for similar items in EconPapers)
JEL-codes: D24 G21 L89 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:17:y:2016:i:c:p:25-32

DOI: 10.1016/j.frl.2016.01.003

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