Loans, Interest Rates and Guarantees: Is There a Link?

This paper aims at shedding light on the influence of guarantees on the loan pricing. After reviewing the literature on the role of guarantees in bank lending decisions, we estimate a bank interest rate model that explicitly includes collateral and personal guarantees as explanatory variables. We show that banks follow different lending policies according to the type of customer. In the case of firms banks seem to efficiently screen and monitor customers, and guarantees (real and personal) are used to reduce moral hazard problems. In the case of consumer households and sole proprietorships banks behave “lazily” by replacing screening and monitoring activities with personal guarantees. Collateral, instead, is used to separate good from bad customers (i.e., to mitigate adverse selection problems).Banking Crisis; Determination of Interest Rates, Banks, Asymmetric and Private Information.

Credit Expansion and Banking Crises: The Role of Guarantees

This paper aims at analysing whether banking changes that occurred in Italy in the last fifteen years have mined the soundness of its financial system. We look for potential threats to financial stability as a result of the dynamic behaviour of Italian banks that progressively have been favouring consumer households at the expense of firms in the allocation of credit. The theme of financial instability is closely linked to the question of capital regulation, which is a centrepiece of government intervention because it affects banks’ soundness and risk taking incentives. After reviewing the literature on capital regulation, we first discuss the role of guarantees as a solution to banks’ potential instability in the case of credit default and, secondly, we estimate a bank interest rate model that explicitly includes collateral and personal guarantees as explanatory variables. We show that banks follow different lending policies according to the type of customer. In the case of firms banks seem to efficiently screen and monitor customers and guarantees (real and personal) are both used to reduce moral hazard problems. In the case of consumer households and sole proprietorships banks behave “lazily” by replacing screening and monitoring activities with personal guarantees; instead, collateral is used to separate good from bad customers (i.e., to mitigate adverse selection problems). These results, together with the large proportion of bad loans in case of unsecured loans, may indicate the existence of potential sources of financial instability because (a) personal guarantees are a small share of loans, especially in the case of consumer households, (b) a decline in the value of collateral held by banks in the event of a housing market weakening.Banking Crisis; Household and Firm Credit Growth; Banking Regulation.

The impact of the recent financial crisis on bank loan interest rates and guarantees.

The paper analyzes the role of guarantees on loan interest rates before and during the recent financial crisis in Italian firm financing. The paper improves on existing literature by distinguishing between real and personal guarantees. Further, the paper investigates the potential different role of guarantees in the bank-borrower relationship during the recent financial crisis. This paper draws from individual Italian bank and firm data taken from the Banks’ Supervisory Reports to the Bank of Italy and the Central Credit Register over the period 2006-2009. Our analysis demonstrates that collateral affects the cost of credit of Italian firms by systematically reducing the interest rate of secured loans, while personal guarantees increase it. These effects are amplified during the crisis. Furthermore, guarantees are a more powerful instrument for ex-ante riskier borrowers than for safer borrowers. Indeed, riskier borrowers obtain significantly lower interest rates on secured loans than interest rate they would be charged on unsecured loans.financial crisis, guarantees, lending relationship

Firms’ Investment in the Presence of Labor and Financial Market Imperfections

This paper analyses how financial and labor market imperfections jointly influence investment. The contemporaneous presence of imperfections in both markets gives rise to a negative correlation between EPL and investment: firms facing negative shocks see their financial constraints worsen in countries with greater labor market rigidities. Internal funds have an overall positive impact on investment, notwithstanding the presence of labor market rigidities acts as a disincentive to the use internal funds for financing new projects. If capital is sunk and the legal environment favors ex-post profit appropriation by workers, firms use internal funds for ends alternative to fixed investment. Our results support the effort put forward by European institutions to reform both markets.Investment Models, Financing Constraints, Labor Protection Legislation, Panel Data Models

Does Employment Protection Legislation Affect Firm Investment? The European Case

This paper aims at analyzing the impact of Employment Protection Legislation (EPL) on frms' investment policies in the presence of financial imperfections. Our results show that investment is positively correlated to measures of internal funds available to firms and negatively to the level of national labour market regulation. Moreover, the latter is stronger wherever financial market imperfections are larger: firms with better access to financial markets are in a position to determine their optimal investment policy, even in the presence of stringent Employment Protection Laws, than those facing financial constraints. Our results support the effort put forward by European institutions in recent years to reform both markets.Employment Protection Legislation, Financial Constraints, Investments.

Does innovation affect credit access? New empirical evidence from Italian small business lending

In this paper we analyze the access to credit of innovative firms on the price and non-price dimensions of bank lending. Using information from two datasets, we use a propensity score matching procedure to estimate the impact of the innovative nature of firms on: (a) loan interest rates; (b) the probability of having to post collateral; and (c) the probability of overdrawing. Our analysis reveals that banks trade off higher interest rates and lower collateral requirements for firms involved in innovative processes. Further, innovative firms have a lower probability of being credit rationed than their non-innovative peers

The productivity gap among European countries.

This paper aims at analyzing Total Factor Productivity (TFP) in four European countries (France, Germany, Italy and the Netherlands) between 1950 and 2011. It uses the common trend - common cycle approach to decompose series in trends and cycles. We find that the four economies share three common trends and a common cycle. Further, we show that in the case of Italy and the Netherlands trend and cycle innovations have a negative relationship that supports the 'opportunity cost' approach to productivity growth, and that trend innovations are generally larger than cycle innovations. Finally, while we do not explore what drives the three common trends, we show that countries' differences in TFP performance in recent years may be due to the so-called "deep"determinants in growth literature such as the presence of efficient mechanisms of creation and transmission of knowledge, international integration, and ecient markets and institutions

No Relationship Between Preoperative and Early Postoperative Strength After ACL Reconstruction

Context: All rehabilitative programs before ACL reconstructive surgery, which are focused on recovery of proprioception and muscular strength, are defined as prehabilitation. While it has shown that prehabilitation positively affects the overall outcome after ACL reconstruction, it is still controversial whether enhancing preoperatively quadriceps strength has some beneficial effect on postoperative strength, mainly during the first period. Objective: To determine whether there is any relationship between pre- and early postoperative quadriceps strength. Design: Case control. Setting: University research laboratory. Participants: Fifty-nine males (18-33 y; age: 23.69 (0.71) y) who underwent ACL reconstruction with patellar-tendon autograft were examined the day before surgery, at 60 and at 90 days after surgery. Main Outcome Measures: The limb-symmetry-index (LSI) was quantified for maximal voluntary isometric contraction (MVIC) of the knee extensor muscles and of the knee flexor muscles at 90° joint angle. K-means analysis was performed on either quadriceps or hamstrings LSI before surgery to classify the patients in high and low preoperative LSI clusters. Differences in postoperative LSI were then evaluated between the high and low preoperative LSI clusters. Results: Following surgery, there were no differences in the quadriceps LSI between patients with high and low preoperative quadriceps LSI. Sixty days after surgery, the hamstrings LSI was higher in patients with high than low preoperative hamstrings LSI (84.0±13.0% vs 75.4±15.9%; P<0.05). Conclusions: Findings suggest that quadriceps strength deficit is related to the ACL injury and increases further after the reconstruction without any correlation between the pre-operative and postoperative values. Therefore, it appears that there is no need to delay surgery in order to increase the preoperative quadriceps strength before surgery

Asymmetrical lower extremity loading early after ACL reconstruction is a significant predictor of asymmetrical loading at the time of return to sport

OBJECTIVES: The aim of this study was to examine whether asymmetrical lower limb loading early after anterior cruciate ligament reconstruction (1 mo) can predict asymmetrical lower limb loading at the time of return to sport (6 mos) and whether other early predictors as knee joint range of motion or maximal isometric strength affect this relationship. DESIGN: Ground reaction forces were measured during a sit-to-stand task 1 mo after anterior cruciate ligament reconstruction and a vertical countermovement jump 6 mos after anterior cruciate ligament reconstruction in 58 athletes. Other early postoperative measurements were knee joint range of motion (2 wks, 1 mo, and 2 mos after surgery) and maximal isometric strength of the knee extensor and flexor muscles (2 mos after surgery). Linear regression models were developed using side-to-side limb symmetry index (LSI) of countermovement jump as the dependent variable. RESULTS: LSI of sit-to-stand task 1 mo after surgery was a significant independent predictor of LSI of countermovement jump 6 mos after surgery. After accounting for deficits in knee joint range of motion and LSI of maximal isometric strength (ΔR² = 0.35, P < 0.01), LSI of sit-to-stand task predicted LSI of countermovement jump (ΔR² = 0.14 P < 0.01). CONCLUSIONS: Asymmetrical lower extremity loading 1 mo after anterior cruciate ligament reconstruction is an early predictor of asymmetrical lower extremity loading 6 mos after surgery

Everyday Heritage and Place-Making

In this paper, I combine sources from environmental psychology with insights from the everyday aesthetics literature to explore the concept of ‘everyday heritage’, formerly introduced by Saruhan Mosler (2019). Highlighting the potential of heritage in its everyday context shows that symbolic, aesthetic, and broadly conceived affective factors may be as important as architectural, historical, and artistic issues when it comes to conceiving of heritage value. Indeed, there seems to be more to a heritage site than its official inscription on the UNESCO register. A place is included as part of our heritage primarily because it matters to us. People live in, form relationships with, and derive existential and affective meanings from it. Above and beyond its official significance, a heritage site is thus a living dimension that plays a vital role in the everyday life and social practices of people, who transform it into a place of human significance.