Do microeconomic and macroeconomic factors influence Italian bank credit risk in different local markets? Evidence from cooperative and non-cooperative banks

Cristian Barra and Nazzareno Ruggiero ()

Journal of Economics and Business, 2021, vol. 114, issue C

Abstract: This paper investigates the role of microeconomic and macroeconomic factors on Italian bank risk taking, paying particular attention on the differences between cooperative and non-cooperative banks. The non-performing loan ratio is used as dimension of bank risk taking. The data refer to a large sample of financial institutions covering the 2001−2014 period. We then assess whether the impact of microeconomic and macroeconomic factors is shaped by the market structure and investigate the effects of the 2008 financial crisis on banks’ risk taking. Our empirical findings have several of policy implications and can be summarised as follows: i) capitalisation, volume of credits, volume of costs and intermediation costs are the key microeconomic factors explaining credit quality; b) among the main macroeconomic factors, branch density, deposit density and specialisation have a significant effect on the variable of interest; c) the financial crisis determined an increase in banks’ credit rationing. Our results suggest that regulators, in changing banks’ incentives, can be effective in improving the quality of credits, therefore enhancing the stability of the financial system. Capital requirements, often considered as a proxy that captures the effects of Basel agreements, have been found to increase credit quality.

Keywords: Microeconomic factors; Macroeconomic factors; Bank risk taking (search for similar items in EconPapers)
JEL-codes: C14 D21 G21 G28 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148619520304203
Full text for ScienceDirect subscribers only

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:eee:jebusi:v:114:y:2021:i:c:s0148619520304203

DOI: 10.1016/j.jeconbus.2020.105976

Access Statistics for this article

Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter

More articles in Journal of Economics and Business from Elsevier
Bibliographic data for series maintained by Catherine Liu ().