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Cooperative Credit Banks and Economic Fluctuations: The Italian Case

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  • Guglielmo Maria Caporale
  • Matteo Alessi

Abstract

This paper analyses lending behaviour and economic fluctuations in the Italian banking system as a whole and in the case of the Cooperative Credit Banks (CCBs) using time series data from 2000Q1 to 2022Q4. The specified models include the main determinants of loans to households and firms. In the first stage, VECMs are estimated to identify the long-run relationship between credit and economic variables. In the second, on the basis of appropriate exogeneity tests, only the credit variables are treated as endogenous, and all others as exogenous. Specifically. ECMs are estimated for both loans to households and loans to firms at the national level as well as from the CCBs only. The results suggest that lending behaviour is less affected by economic fluctuations in the case of the CCBs, namely these tend to reduce credit by less or not at all during economic downturns. The reason is that relationship lending enables CCBs to gather confidential (non-public) information about their clients, which can aid lending decisions and reduce credit rationing during such phases.

Suggested Citation

  • Guglielmo Maria Caporale & Matteo Alessi, 2024. "Cooperative Credit Banks and Economic Fluctuations: The Italian Case," CESifo Working Paper Series 10958, CESifo.
    • Handle: RePEc:ces:ceswps:_10958
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    References listed on IDEAS

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    More about this item

    Keywords

    cooperative credit banks; bank lending; financial systems; economic cycles;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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