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Bad Loans and De Novo Banks: Evidence From Italy
Author(s) -
Ambrosio Rachele Anna,
Coccorese Paolo
Publication year - 2015
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/ecno.12027
Subject(s) - curse , empirical evidence , monetary economics , financial system , business , economics , winner's curse , persistence (discontinuity) , banking industry , philosophy , geotechnical engineering , epistemology , sociology , anthropology , engineering
The existing empirical evidence suggests that there is a ‘winner's curse’ for banks entering new markets. Actually, it has been assessed that de novo banks generally experience higher bad loans rates than mature banks for about 10 years. We investigate whether this persistence has characterised the Italian banking industry in the period 1995–2010, and find that theory predictions are confirmed by empirical results only for popular and commercial banks, while new cooperative credit banks (CCBs) outperform compared to mature ones due to their distinctive presence and focus on local markets.