Bank Lending Rates and Financial Structure in Italy: A Case Study

By Giovanni Ferri, Carlo Cottarelli, Andrea Generale

April 1, 1995

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Giovanni Ferri, Carlo Cottarelli, and Andrea Generale. Bank Lending Rates and Financial Structure in Italy: A Case Study, (USA: International Monetary Fund, 1995) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses the relation between the financial structure and the determination of bank lending rates in Italy. It notes that the high degree of stickiness of bank lending rates observed in Italy in the past was related to constraints on competition within the banking and financial markets. In this light, it discusses the effect on the lending rate determination process of the sweeping financial liberalization process that characterized the last few years. The paper discusses also the role of the discount rate in speeding up the adjustment process of bank interest rates, and the pros and cons of its possible indexation. The empirical analysis is characterized by use of microeconomic (individual bank) data for a group of 63 Italian banks operating in locally different financial environments. This approach allows the identification of some aspects of the relation between financial structure and lending rate stickiness that were not highlighted in previous studies.

Subject: Bank credit, Banking, Commercial banks, Discount rates, Financial institutions, Financial markets, Financial services, Money, Money markets, Treasury bills and bonds

Keywords: Africa, Bank credit, Commercial banks, Determination process, Discount rate, Discount rates, Financial structure, Lending rate, Money market, Money market rate, Money markets, Rate stickiness, Stickiness in Italy, Treasury bill, Treasury bill rate, Treasury bills and bonds, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1995/038
Stock No:

WPIEA0381995
ISBN:

9781451845631
ISSN:

1018-5941

Notes

Also published in Staff Papers, Vol. 42, No. 3, September 1995.

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