Micro variables are best warning signs for smaller Italian banks – BoI

Italian woman on a scooter

A working paper published by the Bank of Italy presents an early-warning system for smaller Italian banks.

In An early-warning system for less significant Italian banks, Fabrizio Ferriani et al base the model an extensive list of variables that might warn of a crisis. The system is designed to detect both systemic crises and major problems at individual banks. Several of Italy’s less significant institutions, or LSIs, have been placed in resolution in recent years.

The authors use less

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