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Non-bank finance for firms: the role of private equity funds in Italy


  • Daniele Coin

    () (Bank of Italy)

  • Valerio Vacca

    () (Bank of Italy)


Abstract Using fund-, firm- and bank-level data, we investigate the investments of the Italian private equity (PE) funds, with a focus on the north-western regions of Italy, where both the PE fund managers and their investments are heavily concentrated. The average size of the portfolios is small by international standards, and their concentration by firm has been growing after the 2008 crisis. The average duration of investments is rather short (about 3.7 years), and less than 10 % of them target firms that are both young and innovative. PE investments by Italian fund managers are still underdeveloped, relative to traditional bank credit. We find that being participated by a PE fund increases the amount of credit obtained by the target firm and the number of bank relationships, whereas it leaves the cost of credit unaffected. The effect of the PE fund participation is exclusively related to the entry of the fund in the firm’s capital, as it fades away as soon as the fund exits from the capital, thus suggesting a weak signalling role of PE towards banks.

Suggested Citation

  • Daniele Coin & Valerio Vacca, 2016. "Non-bank finance for firms: the role of private equity funds in Italy," Empirical Economics, Springer, vol. 51(1), pages 221-243, August.
  • Handle: RePEc:spr:empeco:v:51:y:2016:i:1:d:10.1007_s00181-015-1009-9
    DOI: 10.1007/s00181-015-1009-9

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    References listed on IDEAS

    1. Lily Fang & Victoria Ivashina & Josh Lerner, 2013. "Combining Banking with Private Equity Investing," Review of Financial Studies, Society for Financial Studies, vol. 26(9), pages 2139-2173.
    2. Thomas Hellmann & Laura Lindsey & Manju Puri, 2008. "Building Relationships Early: Banks in Venture Capital," Review of Financial Studies, Society for Financial Studies, vol. 21(2), pages 513-541, April.
    3. Luigi Cannari (editor) & Massimo Gallo (editor) & Alesssandra Staderini (editor), 2011. "The economy of the North East of Italy," Workshop and Conferences 8, Bank of Italy, Economic Research and International Relations Area.
    4. Winton, Andrew & Yerramilli, Vijay, 2008. "Entrepreneurial finance: Banks versus venture capital," Journal of Financial Economics, Elsevier, vol. 88(1), pages 51-79, April.
    5. Popov, Alexander & Roosenboom, Peter, 2009. "Does private equity investment spur innovation? Evidence from Europe," Working Paper Series 1063, European Central Bank.
    6. Chiara Bentivogli & Amanda Carmignani & Diana Marina Del Colle & Roberto Del Giudice & Massimo Gallo & Andrea Generale & Anna Gervasoni & Massimiliano Rigon & Paola Rossi & Enrico Sette & Bruna Szegï¿, 2009. "Private equity and venture capital in Italy," Questioni di Economia e Finanza (Occasional Papers) 41, Bank of Italy, Economic Research and International Relations Area.
    7. Allen N. Berger & Klaus Schaeck, 2011. "Small and Medium‐Sized Enterprises, Bank Relationship Strength, and the Use of Venture Capital," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 461-490, March.
    8. Masako Ueda, 2004. "Banks versus Venture Capital: Project Evaluation, Screening, and Expropriation," Journal of Finance, American Finance Association, vol. 59(2), pages 601-621, April.
    9. Lily Fang & Victoria Ivashina & Josh Lerner, 2013. "Combining Banking with Private Equity Investing," NBER Working Papers 19300, National Bureau of Economic Research, Inc.
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    More about this item


    Private equity; Fund portfolio; One-way fixed effects estimator;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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