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The Strategic Use of Swaps by Italian Regions

30 Pages Posted: 31 Oct 2019

See all articles by Giulia Fantini

Giulia Fantini

Swansea University

Chiara Oldani

University of Viterbo Dept of Economics and Engineering; Sapienza University Dept of Management; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Date Written: October 22, 2019

Abstract

Swaps have been extensively employed by Governments and local administrations to manage their debt and related costs, but the financialisation of the public sector had insufficient attention in the literature. This study creates the first database on swaps underwritten by Italian regions to investigate their impact on total debt and their strategic use, i.e., impact on discretional debt. Panel data results show that regions with higher debt exhibit a larger interest rate exposure and have employed derivatives for strategic purposes in attempts to counter balance the reduced resources received from the central state, in line with other countries’ experience. Implications of results for regulators and governance of risks are provided.

Keywords: Italian regions, local public debt, public accounting, swap

JEL Classification: H63, H72, H74

Suggested Citation

Fantini, Giulia and Oldani, Chiara, The Strategic Use of Swaps by Italian Regions (October 22, 2019). Available at SSRN: https://ssrn.com/abstract=3473817 or http://dx.doi.org/10.2139/ssrn.3473817

Giulia Fantini

Swansea University ( email )

School of Management
Bay Campus, Fabian Way
Swansea, SA1 8EN
United Kingdom
01792295775 (Phone)

Chiara Oldani (Contact Author)

University of Viterbo Dept of Economics and Engineering ( email )

Via Palmanova
Viterbo, 00110
Italy

Sapienza University Dept of Management ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

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