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Npls sales and market reactions: who is left empty-handed?

Author

Listed:
  • Mario La Torre

    (Sapienza Università di Roma)

  • Gianfranco Vento

    (Regent’s University London)

  • Helen Chiappini

    (Università «G. d’Annunzio» Chieti-Pescara)

  • Giuseppe Lia

    (Banca d’Italia)

Abstract

Using the peculiarity experience of the Italian banking market over the years 2014-2017, the aim of this paper is to empirically test the market reaction to Npls sales. The methodology used is event study. The research contributes to the existing literature showing that the Npls sale generates a positive wealth effect for sellers. The market seems to appreciate Npls sales, evaluating in a positive manner the benefits in terms of balance sheet clean up, liquidity and recovery of credit activity. By contrast, the market seems not showing awarenesses for the liquidity reinvestment in riskier assets and for the loss of value deriving from the gap between the price of Npls sale and Npls book value

Suggested Citation

  • Mario La Torre & Gianfranco Vento & Helen Chiappini & Giuseppe Lia, 2019. "Npls sales and market reactions: who is left empty-handed?," BANCARIA, Bancaria Editrice, vol. 3, pages 30-47, March.
    • Handle: RePEc:ban:bancar:v:3:y:2019:m:march:p:30-47
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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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