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Technical efficiency of the Italian Mutual guarantee institutions

Author

Listed:
  • Domenico Piatti

    (Università di Bergamo)

  • Peter Cincinelli

    (Università di Bergamo)

Abstract

Cost efficiency is a peculiar element for the Mutual Guarantee Institutions (Confidi) core business. Efficient resource management is the condition that can enable a future development of the collaterals market. Adopting the stochastic frontier approach to a sample of Italian Confidi, the paper has a twofold objective: measure the level of cost efficiency and its determinants variables. The results show that Confidi disperse resources by about 15-20%, and thus could produce the same output, saving 15-20% of the inputs, even if there are very diversified situations and over time there is a general improvement. Credit risk represents a significant driver of inefficiency, while the capitalization, size and contributions improve cost efficiency. Further improvements related to a revision and/or reorganization of processes and business models of Confidi ought to be considered

Suggested Citation

  • Domenico Piatti & Peter Cincinelli, 2019. "Technical efficiency of the Italian Mutual guarantee institutions," BANCARIA, Bancaria Editrice, vol. 2, pages 22-44, February.
    • Handle: RePEc:ban:bancar:v:2:y:2019:m:february:p:22-44
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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