Mo.Fi.R. Working Papers (2018)

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

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  • Paper nr. 147
Title: Risk and competitiveness in the Italian banking sector
Authors:  Francesco Marchionne, Alberto Zazzaro
In this paper, we analyse the relationship between risk and competition in the Italian banking sector over the period from 2006 to 2010. We employ OLS and panel estimators to estimate the impact of the Lerner index, a measure of bank market power, on the Altman Z-score, a proxy of the insolvency
probability. Our results are consistent with the traditional charter value paradigm and reject the new risk-shifting paradigm proposed by Boyd-De Nicolo' (2005). We find that the relationship between bank risk and competition becomes more tightening during the financial crisis. Our results are robust
to different definitions of crisis and different specifications.
JEL Codes:   G01, G21, G33
Keywords:  bank, competition, stability, financial crisis
  • Paper nr. 146
Title: The closer the better? Institutional distance and information blurring in a political agency model
Authors:  David Bartolini. Agnese Sacchi, Domenico Scalera, Alberto Zazzaro
Government accountability increases with voters’ proximity to policy-makers. Decentralization reforms implemented in many countries in the last twenty years are based on this principle. We present a political agency model that challenges this view and shows that the effects of increasing proximity may depend on the institutional context. In particular, the presence of rent-seeking politicians and heterogeneity in voters’ political awareness produce
three distinct optimal levels of decentralization. Furthermore, optimal distance depends on the capacity of rent-seeking incumbents to blur information available to voters. When the incumbent reacts to increasing proximity with more blurring activity, the optimal distance increases. Accordingly, less decentralization is preferable.
JEL Codes:  D72; D82; D83; H40
Keywords:  government accountability, information, institutional distance, rent-seeking, political awareness