PUBLIC CREDIT GUARANTEES AND BANKING SYSTEM: THE ITALIAN CASE DURING COVID-19 EMERGENCY

Alberto Banfi, Alberto Marchesi and Francesca Pampurini
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Alberto Banfi: Catholic University of the Sacred Heart of Milan, Department of Economics and Business Management Sciences, Largo Gemelli 1, 20123 Milan, Italy
Alberto Marchesi: Catholic University of the Sacred Heart of Milan, Department of Economics and Business Management Sciences, Largo Gemelli 1, 20123 Milan, Italy
Francesca Pampurini: Catholic University of the Sacred Heart of Milan, Department of Economics and Business Management Sciences, Largo Gemelli 1, 20123 Milan, Italy

Journal of Financial Management, Markets and Institutions (JFMMI), 2024, vol. 12, issue 02, 1-25

Abstract: This paper presents an in-depth examination of the impact of public support to small and medium Italian enterprises during the COVID-19 pandemic. The country’s banking system was entrusted a key role in implementing extraordinary measures of financial support, such as moratoria and public guarantees. This support prevented the sudden drop in revenues and cash flows — caused by the pandemic and the related severe restrictive measures adopted by the Italian Government — from compromising the liquidity and solvency of a huge number of firms, thus preventing the occurrence of a chain of insolvencies, which would have seriously deteriorated Italian economy. To perform these tasks, Italian banks had to cope with commitments which severely tested their organizational structure, due to a large number of operations and the complexity and urgency these tasks entailed, especially in the first months of the emergency period. The study, in a five-year perspective, analyses — in terms of intensity and pervasiveness — the set of such initiatives, both at the entire Italian banking system level and at the specific cooperative banks level, the latter characterized by greater proximity to potentially more fragile customers. The aim of this work is to verify whether the effectiveness of the Italian banking system in this key role of accomplishing the transmission of economic policy decisions, aimed at promoting and sustaining real economy during a particularly difficult period, can be confirmed.

Keywords: Banking system financial support; public guarantees; COVID-19 emergency; small and medium-sized enterprises (SMEs); bank proximity (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S2282717X2450004X

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