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How slow is the recovery of loans to firms in Italy?

Ginette Eramo (), Roberto Felici (), Paolo Finaldi Russo () and Federico Signoretti ()
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Ginette Eramo: Bank of Italy
Roberto Felici: Bank of Italy
Paolo Finaldi Russo: Bank of Italy

No 469, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper studies the characteristics of the recent evolution of loans to non-financial firms in Italy from an historical perspective, with the aim of ascertaining whether the ongoing recovery is creditless; the main demand- and supply-side determinants of credit are also discussed. We find the following results. First, bank loan dynamics have been weak compared to the universe of recoveries in 13 euro-area countries since 1980; however, credit has evolved in line with the median pattern in the restricted sample of recoveries following deep and long recessions and/or recessions associated with banking crises. Second, the reduction in loans has been common to firms of all sizes, though it has been more pronounced for smaller ones. Third, based on a review of credit market indicators, survey evidence and econometric studies, the weakness of lending to firms has been in line with subdued dynamics of demand; the stringency of lending criteria has also contributed, in particular for smaller and riskier firms.

Keywords: creditless recovery; credit demand; credit supply; small firms financing (search for similar items in EconPapers)
JEL-codes: E32 E50 G20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-eec, nep-his and nep-mac
Date: 2018-11
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