Banking system and economic resilience: an analysis of the Italian case

In 2007-08, the impact of one of the most severe crises of the last decades, the so called “Great Recession”, led to increased interest in the study of functioning of the newest financial instruments adopted in those years. They seem to be the major cause of the diffusion of the crisis. In pair with the analysis of banking and financial systems, the interest has been increasing in evaluating the reason why some regions result to be more resilient than others. The increased interconnections among markets and the phenomenon of the globalization could represent ways to improve stability of economics systems and, they should be the cause of a fast diffusion of shocks that hit one of the elements of the entire system. From this point of view, it is important to identify the different nature of Italian banks. The Italian banking system is characterized by the presence of SPAs (società per azioni, i.e., investment and commercial banks), banks with a relevant presence of internationalization, BCCs (banche di credito cooperativo, i.e., cooperative banks) and POPs (banche popolari, i.e., people’s banks), banks that operate mainly in local markets. The concept of resilience, was previously applied to biological and engineering science subjects and subsequently to social science and economics in order to understand if certain characteristics could be representative of the ability of subjects or systems, such as regions, to resist to external shocks. Following this line of studies, my thesis tries to provide an overview of the existent literature on resilience and its different applications in order to evaluate if and how Italian banking system can influence resilience of regions. The analysis moves from some different indices of resilience and it evaluates how banks characteristics influence their own ability to overcome periods of crisis. The existing differences among “types” of banks make them react in different ways to external shocks and influence resilience of regions and provinces. Furthermore, SPAs have a different structure that gives them more interconnections with foreign banks and operate in different markets compared to BCCs and POPs. Anyway, although results confirm a higher level of resilience for BCCs and POPs, it is undeniable that the maintenance of a certain level of “biodiversity” could be the best way to reach a higher level of resilience. The analysis is centred on banks’ resilience in Italy and takes into consideration their different nature. It evaluates how the presence of different banks “types” influences the ability to resist of local economies.