No abstract

In this study, we analyze the relation between market structure and financial stability both theoretically and empirically by considering two types of agents: profit-oriented banks and mutual cooperative banks in the context of Italy. The main findings show that under the condition that mutual cooperative banks are not dominated by borrowers, there is an inverted U-shaped relation in which a less concentrated market structure increases stability for both types of banks but a more concentrated market structure reduces it.

Using regional data for Italy over the 2004–2019 period, this paper investigates the relationship between government effectiveness and inequality. For our empirical purposes, ordinary least squares, instrumental variable (IV) and generalized methods of moments regressions have been employed. Our evidence indicates that improved government effectiveness has some role in reducing inequality in the most developed regions of the North, but has no effect in both the Centre and in the peripheral Southern regions.

Using data for Italy from 1994 to 2015, we appraise the nexus between Basel II and III accords and both the cost and the profit inefficiency of profit‐oriented and mutual cooperative banks. Our analysis further deals with the effects of the regulation in different market structures. To assess the efficiency of the two types of banks under scrutiny, a stochastic frontier approach has been proposed. The evidence reported in this paper indicates that the regulatory framework of the Basel accords had heterogeneous effects on the efficiency of Italian banking institutions. Specifically, Basel II is associated with a contraction in the profit inefficiency and an increase in the cost inefficiency for mutual cooperative banks. On the other hand, Basel III worsened the profit inefficiency, though it is found to reduce the profit inefficiency of mutual cooperative banks, with no significant impact on cost inefficiency. Furthermore, once we control for the degree of market competition, the effects of the regulation are shown to be statistically insignificant. The advent of the 2008 recession and the application of the revenue inefficiency do not alter the main findings. There is also some evidence of spatial effects of the Basel II regulation at the LMA level.