Loan Origination Standards and Credit Quality: Evidence from the Implementation of the EBA Guidelines in Italy

This paper investigates the macro-financial implications of the implementation of the European Banking Authority Guidelines on Loan Origination and Monitoring (EBA-LOM), which became applicable to new lending in June 2021. The Guidelines represent a major micro-prudential reform aimed at strengthening borrower assessment, data governance, collateral valuation, and monitoring practices in European banking.Using annual Bank of Italy data for the period 2017?2025, the analysis examines the evolution of credit supply and credit quality indicators for loans granted to non-financial corporations in Italy. The empirical strategy combines descriptive analysis with interrupted time-series models and reduced-form dynamic specifications controlling for macroeconomic conditions and the ECB monetary stance.The results provide no evidence of a structural contraction in aggregate lending following the implementation of EBA-LOM. At the same time, credit quality indicators?measured by default inflow rates and the NPL ratio?continue to improve or remain stable throughout the post-implementation period. Credit dynamics appear instead to be primarily driven by macro-financial conditions, particularly the sharp monetary tightening cycle initiated by the European Central Bank in 2022.These findings suggest that strengthened underwriting and monitoring standards can improve the resilience of bank loan portfolios without undermining aggregate credit provision in bank-based financial systems. The Italian experience therefore provides relevant policy insights for the design of prudential frameworks aimed at simultaneously supporting financial stability and sustainable credit supply.