Italian Banks and Market-Based Corporate Financing

38 Pages Posted: 20 Apr 2018

Date Written: March 28, 2018

Abstract

The recent financial crisis has induced firms to turn increasingly to financing sources other than bank credit, and banks to boost their income from non-lending services. This paper provides some evidence concerning possibility and convenience for Italian banks to expand the supply of financial services to firms by examining the placement market for Italian corporate securities and its relationship with the credit market in the period 2000-2016. The paper shows that when firms entered the stock and bond markets, bank credit was partially crowded-out and interest rates dropped for both first-time issuers and risky firms. However, when banks also played a major role both in placing corporate issues and in financing the issuers, lending relationships did not weaken.

Keywords: stock and bond issues, securities placement, banks’ profitability, corporate financing

JEL Classification: G21, G24, G30, G32

Suggested Citation

Albareto, Giorgio and Marinelli, Giuseppe, Italian Banks and Market-Based Corporate Financing (March 28, 2018). Bank of Italy Occasional Paper No. 432, Available at SSRN: https://ssrn.com/abstract=3165495 or http://dx.doi.org/10.2139/ssrn.3165495

Giorgio Albareto (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giuseppe Marinelli

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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