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Purpose This study aims to propose a non-linear model to describe the effect of macroeconomic shocks on delinquency rates of three kinds of bank loans. Indeed, a wealth of literature has recognized significant evidence of the linkage between macro conditions and credit vulnerability, perceiving the importance of the high amount of bad loans for economic stagnation and financial vulnerability. Design/methodology/approach Generally, this linkage was represented by linear relationships, but the strong dependence of bank loan default on the economic cycle, subject to changes in regime, could suggest non-linear models as more appropriate. Indeed, macroeconomic variables affect the performance of bank’s portfolio loan, but such a relationship is subject to changes disturbing the stability of parameters along the time. This study is an attempt to model three different kinds of bank loan defaults and to forecast them in the case of the USA, detecting non-linear and asymmetric behaviors by the adoption of a Markov-switching (MS) approach. Findings Comparing it with the classical linear model, the authors identify evidence for the presence of regimes and asymmetries, changing in correspondence of the recession periods during the span of 1987–2017. Research limitations/implications The data are at a quarterly frequency, and more observations and more extended research periods could ameliorate the MS technique. Practical implications The good forecasting performance of this model could be applied by authorities to fine-tune their policies and deal with different types of loans and to diversify strategies during the different economic trends. In addition, bank management can refer to the performance of macroeconomic conditions to predict the performance of their bad loans. Originality/value The authors show a clear outperformance of the MS model concerning the linear one.

This paper analyzes the relationship between the likelihood that Italian firms implement bank debt restructuring and the trade credit. It uses a sample of 2377 Italian firms over the period of 2010–2014. The empirical analysis shows that the amount of payables and the unexpected delay in the payment of trade credit are strictly related to the firm’s financial distress. Specifically, the findings suggest that companies in financial distress have used trade credit extensively and suffer from the deferment of receivables. This result supports the hypothesis of a potential credit contagion channel in the supply chain with a cascading effect between buyers and suppliers.

According to the established literature, banks undertake social investment to compensate for the benefits enjoyed by the society. At first glance, one could expect more involvement in corporate social responsibility (CSR) from banks that have greater monopolistic power. However, this perspective would differentiate between banks and non-financial firms, since the latter use CSR engagement as a competitive lever. Thus, it follows that greater market pressure boosts a firm’s CSR investments. This conundrum has triggered the present analysis which, after estimating a Lerner index and then running a system-GMM regression, verified the impact of a firm’s monopolistic competition based on three scores pertaining to the listed banks’ CSR commitment. Our results support the view that the level of social responsibility of the banks’ management is affected by their markup on price.