Mo.Fi.R. Working Papers (2021)

Mo.Fi.R. Working Papers (>> Mo.Fi.R. website)

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  • Paper nr. 170
Title: O Tell Me The Truth About Central Bank Digital Currency
Authors: Riccardo De Bonis, Giuseppe Ferrero
  • Paper nr. 169
Title: Frequency vs. Size of Bank Fines in Local Credit Markets
Authors: Francesco Marchionne, Michele Fratianni, Federico Giri, Luca Papi
We examine how banking supervisors affect credit at the local level by charging fines to individual banks. Using a macro approach to capture the direct effect on the fined bank and the indirect effect on the other banks operating in the local credit market, we estimate reputational, reallocation and balance sheet effects on Italian provinces over the period 2005-2016 by a fixed effects model and instrumental variables. Provincial gross bank loans expand after a fine independently of its size. The impact of fine frequency depends on the size of the provincial banking sector, but neither on bank governance/ownership nor crises. No statistically
significant evidence supports reputational or balance sheet effects. Instead, our results suggest that it would behoove bank supervisors to favor frequency over size of bank fines. Bank fines seem to work more like a good housekeeping seal of approval, enhancing transparency and effective banking practices.
  • Paper nr. 168
Title: Estimating the Relationship Between Collateral and Interest Rate: A Comparison of Methods
Authors: Andrea Bellucci, Alexander Borisov, Germana Giombini, Alberto Zazzaro
This paper uses a variety of estimation methods to explore the empirical relationship between interest rate and collateral requirements in bank loan contracts. Methods that do not allow for endogenous contract terms detect a positive reciprocal association between interest rate and collateral. Methods that allow for endogenous contract terms point to a strong positive effect of interest rate on collateral but the effect of collateral on interest rate is much weaker. This highlights the importance of incorporating the endogenous nature of contract terms in empirical work.