The Banking System and Savings Allocation in Italy

It is well known that banks play an important role in the economic growth of bank-oriented economic systems such as the Italian one. The Italian banking industry is in fact the main financial sector in Italy, as it represents 82 per cent of total financial activities (and 24.3 per cent of GDP). Although, by the end of 2009 the total loans of institutional investors, such as insurance companies, investment funds, pension funds and investment management companies, were about 11.8 per cent of GDP, the Italian capital market was still playing a minor role in boosting Italian economic growth. Despite the merger between Borsa Italiana SPA and the London Stock Exchange and the efforts made to create a segment of the market for small and medium-sized companies, by the end of 2009 Borsa Italiana registered just 291 listed companies, with a capitalization rate of 29 per cent of GDP. This evidence shows that savings allocation and growth perspective in Italy depend heavily on the banking system.