Banking Crises and Boom-Bust Dynamics: Evidence for Italy (1861-2016)

30 Pages Posted: 30 May 2018

See all articles by Silvana Bartoletto

Silvana Bartoletto

University of Naples Parthenope - Department of Economic Studies (DES)

Bruno Chiarini

University of Naples, Parthenope

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES)

Paolo Piselli

Bank of Italy

Date Written: April 16, 2018

Abstract

The financial crises of 2007-2008 and the subsequent worldwide recession show the importance of exploring the correlation between financial and real crises. Starting from our new estimation of the Italian business cycle (Bartoletto et al., 2017), we analyze the linkage between banking crises and the business cycle in Italy over the last two centuries. The vast literature on banking crises in Italy is dominated by the narrative approach. In this work we aim to advance the argument one step further by integrating the narrative approach with an empirical VAR analysis, distinguishing between slowdown and inner-banking crises according to the business cycle phase in which they occur. Our long-run analysis proves that not all the banking crises have a connection with real activity and that not all the crises occurring close to a GDP contraction were associated to a boom-bust mechanism.

Keywords: business fluctuations, financial cycle, bank credit, banking crisis, VAR

JEL Classification: E320, E440, N130, N140

Suggested Citation

Bartoletto, Silvana and Chiarini, Bruno and Marzano, Elisabetta and Piselli, Paolo, Banking Crises and Boom-Bust Dynamics: Evidence for Italy (1861-2016) (April 16, 2018). CESifo Working Paper Series No. 6972, Available at SSRN: https://ssrn.com/abstract=3186420

Silvana Bartoletto

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

Bruno Chiarini

University of Naples, Parthenope ( email )

Via Generale Parisi 13
Napoli, 80133
Italy

Elisabetta Marzano (Contact Author)

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

Paolo Piselli

Bank of Italy ( email )

Via Milano, 64
00184 Rome
Italy

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