Bank Of Italy Research Articles

Gen Z and financial education: Evidence from a randomized control trial in the South of Italy

Leading institutions are promoting several financial literacy initiatives worldwide, yet few of them are still measuring their impact on behavior. Following the current debate on the upcoming mandatory financial education implementation in Italy, this paper provides evidence of the consequences of financial education for Gen Zers’ decision-making. Specifically, we focus on the Bank of Italy's booklets initiative to measure the impact of financial education on intertemporal choices in a middle school in the South of Italy. Through a Randomized Control Trial (RCT) and eliciting time preferences with an incentivized task, we find robust evidence that enhancing financial literacy among Gen Zers significantly improves the quality of decision-making and the consistency of intertemporal choices.

Markov switching stereotype logit models for longitudinal ordinal data affected by unobserved heterogeneity in responding behavior

AbstractWhen asked to assess their opinion about attitudes or perceptions on Likert-scale, respondents often endorse the midpoint or extremes of the scale and agree or disagree regardless of the content. These responding behaviors are known in the psychometric literature as middle, extremes, aquiescence and disacquiescence response styles that generally introduce bias in the results. One of the key motivations behind our approach is to account for these attitudes and how they evolve over time. The novelty of our proposal, in the context of longitudinal ordered categorical data, is in considering simultaneously the temporal dynamics of the responses (observable ordinal variables) and unobservable answering behaviors, possibly influenced by response styles, through a Markov switching logit model with two latent components. One component accommodates serial dependence and respondent’s unobserved heterogeneity, the other component determines the responding attitude (due to response styles or not). The dependence of the responses on covariates is modelled by a stereotype logit model with parameters varying according to the two latent components. The stereotype logit model is adopted because it is a flexible extension of the proportional odds logit model that retains the advantage of using a single parameter to describe a regressor effect. In the paper, a new interpretation of the parameters of the stereotype model is given by defining the allocation sets as intervals of values of the linear predictor that identify the most probable response. Unobserved heterogeneity, serial dependence and tendency to response style are modelled through our approach on longitudinal data, collected by the Bank of Italy.

To Retire or Not to Retire? A Comprehensive Examination of Retirement Decision Dynamics in Italy

The concept of active aging has become central to the public debate in many Western countries, given the increasing aging of the population and the future challenges associated with it. This phenomenon is tightly intertwined with choices regarding the retirement period, which can be postponed for different reasons by individuals in a society. The purpose of this paper is to understand the personal and family characteristics that influence future choices about retirement date in Italy. Utilizing data provided by the Bank of Italy in the Survey on Household Income and Wealth (SHIW), a logistic regression is performed to observe the impact of different covariates on the hypothesized retirement date of individuals close to retirement, i.e., over the age of 50 who are still in working status. The results show that the decision to delay retirement has increased in recent years, and is influenced by personal (e.g., matrimonial status), work, and economic factors. In addition, these factors have different impacts between males and females.

A choice for Europe, a choice for growth? The Bank of Italy, the Pandolfi Plan and the European Monetary System, 1977-1979

The creation of the European Monetary System (EMS) between 1977 and 1979 introduced an element that would become central to Italy's strategy of adjustment to the macroeconomic shocks of the 1970s: the ‘external constraint', a political device — albeit with a technocratic matrix — designed to reduce public debt and enhance the country's economic competitiveness.Conceived by an economist at the Bank of Italy, Tommaso Padoa-Schioppa, in 1978, the reforms of the ambitious programme known as the Pandolfi Plan were designed to restore the competitiveness of the Italian economy. The plan described the main features of the lira's entry into the EMS as an external constraint, based on indications from the Bank of Italy's Director General Carlo Azeglio Ciampi and despite objections from Governor Paolo Baffi.At that juncture, the Bank of Italy consciously assumed the role of substitute that would characterise its action in the following decade, motivating and orienting the country's political choices in favour of an ever more urgent economic and monetary integration of Europe, towards what would finally be formalised with the Maastricht Treaty. Consistently with the structure of the EMS, the external constraint outlined in the Pandolfi Plan moved towards exchange rate constraints related to public finances and to the phenomena of fiscal dominance typical of monetary policy in Italy; it was essentially transformed into a fiscal policy constraint formally recognised in July 1981, with the so-called divorce between the Bank of Italy and the Treasury. The classic external constraint related to the balance of payments accounts and foreign exchange rates remained unchanged towards the rest of the world, meaning that it had an economic and not a "legal" nature, as defined by Guido Carli in the early 1990s.

The Archaeological Museum of Alto Adige—Südtiroler Archäologiemuseum of Bolzano/Bozen, Italy

The museum is housed in a historic building constructed in 1912–1913, which was first the headquarters of the Austro-Hungarian Bank, and later, the Bank of Italy. The building was acquired by the autonomous Province of Bolzano in the 1980s, and in 1996 renovations began for its use as the Archaeological Museum of Alto Adige/Südtirol, which was inaugurated on 28 March 1998.

Measuring health care access and its inequality: A decomposition approach

We introduce a new method for assessing health care access disparities, focusing on the ‘Access Gap’. This gap represents the difference between the (out-of-pocket) cost of access to adequate health care and available financial resources. Our method quantifies this gap for groups with similar characteristics, using indicators like the Gini coefficient and Entropy for overall inequality analysis. Applied to breast cancer treatment in Italy, we consider geographic location as the primary distinguishing characteristic for individual groups. The analysis covers costs of transportation, accommodation, doctor consultations, diagnostic tests, and non-oncology drugs. Financial resource distribution data comes from the Bank of Italy. Our findings show a pronounced Access Gap in Italy’s southern regions, particularly in Campania. We decompose this gap to understand the influence of supply-side (provider distribution) and demand-side (health spending capacity) factors. The results indicate that disparities in access are mainly driven by demand-side elements, specifically regional spending capacity variations.

Seasonal Adjustment of Credit Time Series in the Bank of Italy

Seasonal Adjustment of Credit Time Series in the Bank of Italy

Gender-related effects of financial knowledge and confidence on preferences for ethical intermediaries and sustainable investments

PurposeThis study analyses the role of individuals' objective financial knowledge in shaping preferences for ethical intermediaries and sustainable investments in Italy. Another goal of this study is to assess the impact of individuals' misperceptions about their own financial knowledge and to test for gender-related differences in attitudes towards socially responsible investing (SRI).Design/methodology/approachUsing nationally representative microdata from the Bank of Italy’s “Italian Literacy and Financial Competence Survey” (IACOFI), the authors use probit models, extended to account for potential endogeneity issues, to assess the causal effects of financial knowledge and confidence on stated preferences for SRI. Empirical models also allow to explicitly assess the moderating role of gender on the effects of financial knowledge and confidence on attitudes towards sustainable investing.FindingsResults indicate that individuals' preferences for sustainable finance significantly increase with financial knowledge, suggesting that inadequate financial competencies represent a barrier to participation in SRI. At the same time, lack of confidence in one’s own financial knowledge significantly hampers attitudes towards sustainable investments. Furthermore, the authors show that women have a greater preference for sustainable finance than men and point out that financial knowledge and confidence exert heterogenous effects on attitudes towards SRI.Originality/valueThis study provides several contributions to the literature on SRI. First, the authors give evidence of the causal effect of financial knowledge on preferences for both ethical financial intermediaries and sustainable investments. Moreover, this is the first study to investigate the role of financial underconfidence bias in shaping individuals' SRI attitudes. Finally, extending previous research, the authors assess differences in SRI preferences between women and men and provide novel evidence on gender-related heterogeneity in the effects of financial knowledge and underconfidence.

Effects of the Covid Pandemic on the Economic Vulnerability of Italian Society.

This paper provides some insights on the effects of the Covid pandemic, on the economic vulnerability of Italian society. Data come from the first 5 waves of a special social survey, held by Bank of Italy, to monitor the economic consequences of the Covid emergency. Economic vulnerability is assessed through a set of four ordinal variables, then condensed into a synthetic measure, by using tools from Partial Order Theory; social groups are identified based on profiling socio-economic variables. Results reveal the heavy economic impact of the pandemic and the risk of increased polarization of the Italian society.

Hidden Markov models for longitudinal rating data with dynamic response styles

AbstractThis work deals with the analysis of longitudinal ordinal responses. The novelty of the proposed approach is in modeling simultaneously the temporal dynamics of a latent trait of interest, measured via the observed ordinal responses, and the answering behaviors influenced by response styles, through hidden Markov models (HMMs) with two latent components. This approach enables the modeling of (i) the substantive latent trait, controlling for response styles; (ii) the change over time of latent trait and answering behavior, allowing also dependence on individual characteristics. For the proposed HMMs, estimation procedures, methods for standard errors calculation, measures of goodness of fit and classification, and full-conditional residuals are discussed. The proposed model is fitted to ordinal longitudinal data from the Survey on Household Income and Wealth (Bank of Italy) to give insights on the evolution of households financial capability.

KG-Roar: Interactive Datalog-Based Reasoning on Virtual Knowledge Graphs

Logic-based Knowledge Graphs (KGs) are gaining momentum in academia and industry thanks to the rise of expressive and efficient languages for Knowledge Representation and Reasoning (KRR). These languages accurately express business rules, through which valuable new knowledge is derived. A versatile and scalable backend reasoner, like Vadalog, a state-of-the-art system for logic-based KGs---based on an extension of Datalog---executes the reasoning. In this demo, we present KG-Roar, a web-based interactive development and navigation environment for logical KGs. The system lets the user augment an input graph database with intensional definitions of new nodes and edges and turn it into a KG, via the metaphor of reasoning widgets---user-defined or off-the-shelf code snippets that capture business definitions in the Vadalog language. Then, the user can seamlessly browse the original and the derived nodes and edges within a "Virtual Knowledge Graph", which is reasoned upon and generated interactively at runtime, thanks to the scalability and responsiveness of Vadalog. KG-Roar is domain-independent but domain aware, as exploration controls are contextually generated based on the intensional definitions. We walk the audience through KG-Roar showcasing the construction of certain business definitions and putting it into action on a real-world financial KG, from our work with the Bank of Italy.

The role of private and public regulation in the case study of crypto-assets: The Italian move towards participatory regulation

With the Digital Financial package (MiCA, DLT Pilot, and DORA, later on complemented by the DAC8 proposal) the European Union seeks to establish an appropriate legal framework for crypto-assets showing a financial nature. The package represents a first attempt to regulate a complex and emerging phenomenon, characterised by significant trade-offs. Unsurprisingly, in this early stage of the law-making process several relevant aspects of the crypto environment remain unaddressed, such as pure DeFI models, DAOs, and NFTs. Such regulatory gap is to a large extent attributable to the difficulty of addressing technologically complex issues through command-and-control top-down legislation. The improvements delivered by the Better Regulation Agenda are not enough to solve this conundrum. In this context, the Communication by the Bank of Italy on Decentralised Technology in Finance and Crypto-assets and its first move, the smart-contract MoU, provide an interesting case study to discuss the potential of ‘participatory regulation.’ This experimental form of regulation tries to get the most out of co-regulation, self-regulation, and command-and-control, combining their characters with the view of reconciling the technology neutrality principle with technology-based regulation. Participatory regulation aims to bridge the public and private sector in order to strike a right balance between flexibility and legal certainty, without stifling innovation.

Anti-money-laundering oversight and banks’ reporting of suspicious transactions: some empirical evidence

AbstractWe investigate the relation between anti-money-laundering (AML) inspections and banks’ ability and effort to identify and report suspicious transactions. We do so by using detailed data from the Bank of Italy and the Italian Financial Intelligence Unit, which include information on (i) authorities’ on-site inspections and enforcement actions, (ii) quantity and quality of suspicious transactions reports filed by banks before and after inspections, and (iii) reports’ investigative follow-ups. We document an increase in banks’ reporting after an inspection. Crucially, the increase is not concentrated among low-quality reports, but is spread to reports which are relevant from both a financial and an investigative point of view. We thus overall observe a rise in the information conveyed by AML reports after the authorities’ intervention. On the mechanism of the effect, we provide some suggestive evidence that inspections induce an increase of both banks’ reporting effort as well as screening skills (JEL G28, K23, L51, M21).

Share density‐based clustering of income data

AbstractThe Lorenz curve is a fundamental tool for analyzing income and wealth distribution and inequality. Indeed, the Lorenz curve and its derivative, the so‐called share density, provide valuable information regarding inequality. There is a widely recognized connection between the Lorenz curve and elements from information theory field. Starting from this evidence, the aim of this work is to compare the income inequality of different subgroups, by using a proper dissimilarity measure, borrowed from information theory, between parametric share densities. This measure is then considered for clustering purposes. To this end, a dynamic clustering algorithm is considered to group unconventional data, such as density functions. Finally, an application, regarding data from Survey on Households Income and Wealth (SHIW) by Bank of Italy, is shown.

Digitalization of relational space in the service triangle: The case study of retail banking.

The article aims to shed light on the process of shaping the relational space of work in the service triangle through the progressive digitalization of work in retail banking industry. It addresses the following research question: how do technological shifts affect the relationships and interactions (a) between employees and supervisors, and (b) between employees and customers? Through a close examination of the redesign of the interpersonal relationships from the subjective viewpoint of front-line workers across these two levels, the paper contributes to advancing the understanding of the impact of technologies on surveillance practices, work identity and professional ethics in a key working sector with regard to digitalization and changes in professional requirements. The question is addressed through a qualitative case study of retail banking in Italy. In the (retail) banking sector, the redesign of the relations between supply and demand for services is more sensitive to the changes afforded by digitalization and learning algorithms. The study was conducted with the involvement of workers and trade unionists, with whom we embarked on a constant work of re-articulation through data collection, analysis, and conceptualization. We collected a multiplicity of data for triangulation: interviews, focus groups, documents, and ethnographic notes. Data analysis shows how work processes and interpersonal relationships start to be redesigned across the two levels. At (a) level, two main aspects are found: the measurement of individual performance within the logic of quantification, which reduces employees to a set of measured dimensions, pushing workers into conditions of stress and competition; new surveillance practices and forms of organizational control enabled by technologies and learning algorithms. At (b) level, from being an expert with specific knowledge in the financial sector the bank employee turns into a kind of seller of any product that the algorithm decides to sell, thus ignoring the value of situated experience held by embedded, embodied social actors. Moreover, algorithms enter jurisdictional spaces traditionally controlled by knowledge workers and produce unknown outcomes concerning to whom to sell which products that cannot be clearly understood by workers. Technology contributes to engendering complex identity constructions to maintain, protect, and revise professional identity.

The Buffer Function of Wealth in Socioemotional Responses to Covid‐19 in Italy

The social stratification of material consequences of individual‐level disruptive events is a widely researched topic. Less is known about the stratification of psychological outcomes in response to contextual‐level disruptive events. We aim to fill this gap by investigating the aftermath of the Covid‐19 pandemic on individuals’ dispositional optimism and the stratification based on unequal wealth resources. The study focuses on Italy, the first European country to be strongly hit by Covid‐19, and one characterised by high levels of private savings and homeownership. Theoretically, we draw on the conventional social inequalities framework informed by insights from the literature on natural disasters, positing that wealth‐related resource disparities may have stratified the socioemotional response to the pandemic. Empirically, we leverage a combination of individual‐level longitudinal survey data (Bank of Italy’s Special Survey of Italian Households) and municipality‐level official statistics on excess mortality (Italian National Institute of Statistics), covering the first 17 months of the Covid‐19 pandemic in Italy. Results indicate overall negative consequences of severe exposure to risks associated with the pandemic on optimism. However, we found evidence in line with a post‐traumatic growth scenario, as optimism slightly increased over the course of the pandemic. The insurance function of wealth emerges in the higher optimism of individuals with more resources. Nevertheless, resource disparities are not translated into stark differences in susceptibility to risk exposure or post‐traumatic growth. Overall, our findings support a limited insurance function of wealth in the socioemotional sphere.

PUMA Cooperation Between the Bank of Italy and the Intermediaries for the Production of Statistical, Supervisory and Resolution Reporting

PUMA Cooperation Between the Bank of Italy and the Intermediaries for the Production of Statistical, Supervisory and Resolution Reporting

How can Big Data Improve the Quality of Tourism Statistics? The Bank of Italy’s Experience in Compiling the “Travel” Item in the Balance of Payments

How can Big Data Improve the Quality of Tourism Statistics? The Bank of Italy’s Experience in Compiling the “Travel” Item in the Balance of Payments

Firms’ innovation and university cooperation. New evidence from a survey of Italian firms

Abstract In this article, we investigate whether the cooperation with universities may stimulate the innovative performance of Italian firms. We use a dataset merging information from two different surveys carried out by the Bank of Italy between 2007 and 2010. We derive our results using a two-stage procedure with the aim of ruling out spurious correlations due to the existence of omitted variables. Results show that the cooperation with universities does not affect the likelihood of firms introducing technological innovations. However, when we distinguish between pure technological innovation outcomes (only new products and/or productive processes) and joint innovation outcomes, which involve both organizational and technological changes, we find that only the latter is positively stimulated by the cooperation with universities. These findings are promising since, according to the innovation management literature, joint innovation activities are more successful in transferring new ideas and new business opportunities into market success.

Senza credito

Since the 1990s, Italy has undertaken the most intense and prolonged transformation of its intermediation system in Europe. What has proved to be a real upheaval in ownership structures has led to the 'disappearance' of the banking system in the southern regions and the transfer of the 'thinking head' to the central north. This did not happen as a result of market dynamics but thanks to a plan conceived and guided by the Bank of Italy, with the aim of 'saving' the southern banks, increasing their allocation efficiency, management performance and profitability.
 Thirty years after the beginning of the restructuring process, the data used in this work show that the performance gaps between macro-areas have remained substantially unchanged, to the detriment of households and the productive fabric of the southern regions, which - in fact - continue to suffer from lower credit, with higher costs than those of the central and northern regions, which interface with banks that have their local headquarters in the same areas, enjoying the relative benefits.