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This paper estimates the impact of public guarantees on crisis predictive indicators among small and mid-size enterprises (SMEs). We use a confidential database provided by the Italian Ministry of Economic Development on the universe of guarantees granted by the Central Guarantee Fund. We apply difference-in-difference regressions and propensity-score matching estimators to a sample of approximately 40,000 SMEs over the 2010–2018 period. We find that obtaining a public guarantee improves profitability both in the short- and medium-term. On the other hand, SMEs’ financial health worsens in the short run, but financial burdens are alleviated 2 years after the issuance of a guarantee. The economic and financial effects of government-backed loans are amplified for micro-sized firms, companies operating in the service sector and direct guarantees. Our results can thus support public authorities in designing credit guarantee schemes capable of preventing SMEs’ zombification and protecting them from the risk of debt overhang.

Purpose The paper aims to analyze the impact of cyber attacks on stock returns of companies operating in the hospitality sector. The fast development of information and communication technologies has been posited as both an opportunity and a challenge to the United Nations Global Sustainable Development Goals. Digital technologies are significant tools for sustainable development, but if they are not addressed appropriately, they can potentially hinder the progress toward sustainability. Among negative impacts, it is necessary to consider cyber risk, a major concern today, in particular for industries which work with sensitive data, such as tourism businesses. Hospitality businesses have to adequately manage cyber insecurity and digital privacy issues, to prevent losses and contribute to socioeconomic sustainable growth. Design/methodology/approach Using event-study methodology, the paper provides empirical evidence on the effect of announcements of 170 information security breaches on the market value of firms operating in the hospitality sector in the past five years. Findings The study focuses on identifying potential threats of cyber attacks for the economic value of listed companies. The authors find that negative market returns occur following announcements of cyber attacks suffered by hospitality companies. Adequate investments in technology for cyber security and staff training are relevant in the hospitality sector to reduce cyber risk. Originality/value The paper contributes to identifying potential threats of cyber attacks for the economic value of listed companies operating in the hospitality sector. The analysis is carried out by collecting an original sample of global cyber attacks from newspaper announcements sourced from the LexisNexis database.

This study examines determinants of: (a) new flows of unlikely-to-pay loans (UTPs), comparing them to determinants of bad loans; and (b) out-flows from UTPs to performing and bad loans. A novel panel data-set covering the period 2010–2016 is used to test hypotheses relating to lending policy, bank capitalization, bad management, and procyclical credit policy. Determinants identified by the existing literature on the wider category of all non-performing loans are in part confirmed for UTPs and in part rejected. The main findings show: (i) a positive relationship exists between bank capitalization and new flows of both UTPs and bad loans; (ii) reducing cost efficiency increases both new flows of UTPs and the worsening of UTPs towards bad loans; and (iii) having a specific unit/office to manage impaired loans increases flows from UTPs to performing loans, but does not decrease flows to bad loans. Our study is useful for banks seeking to prevent new impaired exposures, to accelerate the transition from UTPs to performing loans, and to prevent UTPs worsening to bad loans. The findings reveal the importance of sound and proactive UTP management, given the need for banks to increase provisions for covering UTPs in the near future.

External guarantees on loans represent an important tool for mitigating the loss given default for a bank, but they are able to produce a negative effect on the firm’s probability of default, affecting the overall level of credit risk. The Central Credit Register plays a leading role in determining the rating assigned by banks to firms, typically small and medium enterprises. Firm-level defaulted and in bonis positions, as well as guaranteed and unsecured loans, are compared using 63,377 reports from the Italian Central Credit Register for a period of 36 months, from 2012 to 2015. External guarantees are able to affect the credit quality of loans to small businesses.

With a sample of 4,065 bonds issued by 63 banks from 12 euro area countries during 2013–2017, this study investigates how introducing bail‐in regulation has influenced bond yields in secondary markets, by distinguishing between non‐bail‐inable and different classes of bail‐inable bonds. The bail‐in risk premium does not follow the hierarchy of risk; it is stronger for less risky bonds. The effect on the spread between senior unsecured and non‐bail‐inable bonds is much higher than for subordinated bonds. Regarding subordinated bonds, the impact is higher for securities excluded from regulatory capital than for those included.

Purpose The purpose of this paper is to focus on public guarantees granted to micro-, small- and medium-sized enterprises (SMEs) by the Italian national credit guarantee programme (Fondo Centrale di Garanzia – Central Guarantee Fund – (CGF)). The CGF provides a direct guarantee to banks granting loans or a counter-guarantee to mutual guarantee institutions (MGIs) acting as first-level guarantors. Because the behaviour of MGIs could affect the default risk of counter-guaranteed loans, it is vital to investigate their operating and structural characteristics in order to identify an optimal design for public credit guarantee schemes (PCGSs). Design/methodology/approach Using regression models, the paper analyses the determinants of default for 33,229 SME loans guaranteed by an MGI and counter-guaranteed by the Italian CGF. The dependent variable is the ex-post default risk of SMEs’ counter-guaranteed loans in the 2010-2011 period. The explanatory variables are certain characteristics of the MGI. Findings The authors demonstrate that increases in an MGI’s leverage and the size of the counter-guaranteed portfolios increase the default risk. When the counter-guaranteed portfolio increases, MGIs are more risk taking but take less risk than when local and specialized MGIs are at play. Finally, direct public aid is relevant. Practical implications An appropriate design of the PCGS becomes crucial to controlling moral hazard in financial institutions and ensuring the financial sustainability of public intervention in favour of SMEs. Originality/value The paper evaluates an original and confidential firm-level data set that is not available in public documents or supervisory board statistics but is collected directly from the MGIs that participated in this study.

The paper investigates the impact of the bail-in regulation on bank bond secondary markets. Using data on outstanding bonds issued by significant Euro-Area banks, the study carries out pooled panel regression analyses to determine the association between yields of “bailinable” and “bailinable” bonds. The paper also analyses the impact of the bail-in tool in relation to bank leverage, which affects the potential severity of losses for bondholders in the case of bail-in. With a sample of 4,855 bonds issued by 45 banks from January 2006 to December 2016, we find an increase in the risk premium for unsecured bonds, and senior unsecured bonds show the greatest effect on yields and yield spread when bail-in regulation came into force. Moreover, a “bail-in severity” premium, related to bank leverage, is identified.

Public credit guarantee schemes are set up with the purpose of facilitating access to credit by Small and Medium-sized Enterprises (SMEs). The aim of the paper is to study the effectiveness and impacts of the Italian Central Guarantee Fund (CGF)’s activity, one of the main public guarantee schemes in Europe. This is even more important in the light of the 2018 CGF reform. Analyzing a sample which includes all the guarantees issued by the CGF from 2012 to 2018 on loans made to manufacturing companies, we find that the CGF methodology is partially able to capture the variables affecting the probability of default of SMEs. The CGF scores before the reform show poor capability to forecast risk in the medium term, above all for micro and small enterprises. The post-reform model shows better forecasting ability and a greater consistency with the Z’’-score, one of the most recognized model in the distress prediction literature. The new CGF model may indirectly control the behaviour of lenders and first-level guarantors. In particular, our findings show that the probability of default on exposures covered by a mutual guarantee institution and counter-guaranteed by the CGF is lower than the probability of default of loans granted by a bank and directly guaranteed by the CGF. As a consequence, the direct guarantees need to be more monitored by the CGF and potential effects on the bank behaviour may derive, strengthening ECB’s supervision activities.

In the present economic conditions public bodies are compelled to rethink assistance given to small and medium enterprises in access to credit while venture capital, mutual guarantee provisions and collateral may help these firms to avoid dangerous short-circuits between demand and offer of financial resources.

The main objective of the research is “to give voice” to bank customers in the UAE and Italy, by analyzing the ways and the extent to which their needs and requests across a wide range of multi-channel banking services are being (mis)communicated, (mis)understood and (un)resolved by bank employees.While previous studies have examined several aspects of customer satisfaction and dissatisfaction with regard to the communication process between customers and bank employees (e.g., customer—front desk officials, customer—call-center agents), very little research has been done so far in order to understand the motivational factors underlying bank customer satisfaction and dissatisfaction with regard to communication in multi-channel banking, which involves different types of interaction: face-to-face, telephone, ATM, online, mobile, apart from branch banking.The empirical data collection method used for this study is the semi-structured interview and the questionnaire. In order to compare the different perspectives, three different sets of interview questions have been designed within the research: (i) a set of interview questions aimed at bank customers; (ii) a set of interview questions aimed at bank employees; (iii) a set of interview questions aimed at bank executives.The results show that banks have to pay close attention to the synergies and relationships among different channels, developing an integrated communication process. The proliferation of both offline and online contact points adds further complexity. In this context, banks have to integrate and reconcile the different sources of information for a holistic overview of the customer, in order to be able to provide a consistent experience across channels.

Purpose– The purpose of this paper is to investigate the drivers influencing the risk of default on mutual guaranteed loans. The authors aim to verify whether default is influenced by the specific business policies of mutual guarantee institutions (MGIs) and to recommend guidelines for directing their operating management.Design/methodology/approach– The authors analyse the guaranteed portfolios of 19 Italian MGIs and investigate the determinants of the defaulted positions at the end of June 2011. The sample consists of 167,777 guaranteed loans, of which 11,349 are in default. Using regression models, we identify the variables related to the business model of MGIs that are significantly associated with default on their positions.Findings– The defaulted positions of MGIs are significantly correlated with the type of issued guarantees. This condition should be considered in defining product and price policies.Practical implications– The authors identify some critical issues in the risk-taking processes of MGIs. The tested hypothesis highlights the opportunities for the optimisation of guaranteed loan portfolios, which is necessary for reducing the profitability/liquidity pressures of these financial institutions and enhancing their efficiency as instruments for mitigating the effects of credit rationing and promoting the revitalisation of small-and medium-sized enterprises.Originality/value– The results are based on an original and reserved dataset, which is not available in public financial statements or public statistics, but is collected directly from the MGIs that are part of the study.