Case 3 - Banking in Italy

Abstract

This chapter discusses a case study on banking in Italy. The banking sector in Italy is characterized by the existence of a large number of commercial and specialist banks with extensive branch networks. The late 1970s were a period of extensive disintermediation in Italian banking. Disintermediation resulted in a change in the composition of personal wealth with shares in mutual funds becoming increasingly important. A corollary of this development was an increase in the demand for portfolio management services, much of which was supplied by the banks. The dramatic changes that have occurred in the personal banking sector have been mirrored in the corporate sector. Dependence on the banking sector for funds has been reduced while interfirm debt and equity are increasingly important. In analyzing bank–firm relations distinctions should be made between the behavior of large and small/medium-sized companies. The former have greatly improved their autonomous financial management skills, increasing their mobility as customers and their credit requirements. One sector in which the Italian banking system does not seem to have exploited the full potential for growth is the management of payment systems. Firms complain that the banks are not very efficient in this area.