Analysys of Gross Loans and Reserves for Impaired Loans of Italian Listed Banks

Abstract

This study aims at monitoring the role of Net loans for banks in terms of impact on total assets and, consequently, the trend of gross loans and the reserves for impaired loans in the period between 2005 and 2013. We also investigate the correlation between loans and their related Reserves for impaired loans, by using the Pearson correlation ratio. Data were extracted from Bankscope, a database containing comprehensive information on financial companies in Italy. Our findings raise important issues on the administrative supervision of banks and the financial system in general. A strong concern regarding the steady increase of impaired loans emerged and consequently the possibility of mergers has become one of the solutions for pursuing a more efficient risk policy.
Classification-JEL:
Keywords: Gross loans; Assets; Reserves; Impairment; Banks; Italian Stock Exchange; Correlation.