What is Worth More for the Merit of Credit? Evidence from the Credit System in the North Eastern Italian District.

42 Pages Posted: 27 Jan 2014 Last revised: 16 Feb 2014

See all articles by Guido Max Mantovani

Guido Max Mantovani

International University of Monaco; Ca' Foscari University in Venice – Department of Management

Mattia Mestroni

Ca Foscari University of Venice - Department of Management

Elisabetta Basilico

International Center of Corporate Governance

Date Written: February 16, 2014

Abstract

Literature agrees about Basel I and II regulations’ inefficiency in improving credit allocation. Recent crisis demonstrates that rating standards fails to generate an efficient asset evaluation system. This is mainly due because of bias in corporate risk estimation. Nevertheless, when dealing with Basel III no single stream of though can be find, especially for SMEs credit scoring implications. We think that new foundations to rating and scoring practices must be searched. The paper presents a framework for a new methodology based on an integrated view or return-to-risk performance related to Lintner’s (1965) certainty equivalent and firm’s return-risk relation analysis (Mantovani et al, 2013). The integration of Lintner’s model with such risks analysis is fundamental in SMEs evaluation, for which no specific standard rating could be produced and also certainty equivalent model cannot find direct application. Focusing on SMEs, we consider a sample of manufacturing firms in the North-East of Italy, where the economic impact of SMEs is the highest and where such firms present best performances.

Keywords: SMEs financing, Basel III, Ratings, Certainty equivalent

JEL Classification: G32, M10, G28

Suggested Citation

Mantovani, Guido Max and Mestroni, Mattia and Basilico, Elisabetta, What is Worth More for the Merit of Credit? Evidence from the Credit System in the North Eastern Italian District. (February 16, 2014). Available at SSRN: https://ssrn.com/abstract=2385466 or http://dx.doi.org/10.2139/ssrn.2385466

Guido Max Mantovani (Contact Author)

International University of Monaco ( email )

14, Rue Hubert Clerissi
Stella Palace
Monaco, Monaco MC-98000
Monaco

Ca' Foscari University in Venice – Department of Management ( email )

Cannaregio 873
Venice, Veneto 30123
Italy
0039-041-2348727 (Phone)
0039-041-2348701 (Fax)

HOME PAGE: http://www.unive.it/management

Mattia Mestroni

Ca Foscari University of Venice - Department of Management ( email )

San Giobbe, Cannaregio 873
Venice, 30121
Italy

Elisabetta Basilico

International Center of Corporate Governance ( email )

Pestalozzistrasse 2
P.O. Box 634
St. Gallen, 9001
Switzerland

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