Abstract: The internationalization of China's equity markets started in the early 2000s but accelerated after
2012, when Chinese firms' shares listed in Shanghai and Shenzhen gradually became available to
international investors. This paper documents the effects of the post-2012 internationalization events
by comparing the evolution of equity financing and investment activities for (i) domestic listed firms
relative to firms that already had access to international investors and (ii) domestic listed firms that
were directly connected to international markets relative to those that were not. The paper shows
significant increases in financial and investment activities for domestic listed firms and connected
firms, with sizable aggregate effects. The evidence also suggests that the rise in firms' equity issuances
was primarily and initially financed by domestic investors. Foreign ownership of Chinese firms
increased once the locally issued shares became part of the Morgan Stanley Capital International
(MSCI) Emerging Markets Index in 2018.
Paper nr. 181
Title: BILATERAL INTERNATIONAL INVESTMENTS:THE BIG SUR?
Authors: Fernando Broner, Tatiana Didier, Sergio L. Schmukler, Goetz von Peter
Abstract: This paper presents novel stylized facts about the rise of the South in global finance using country-tocountry data. To do so, the paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment, foreign direct investment, and international reserves from 2001 to 2018. The main findings are that investments involving the South, and especially within the South, have grown faster than those within the North. By 2018, South-to-South investments accounted for 8% of total international investments, while investments between the South and the North accounted for an additional 26%. The fastest growth occurred in portfolio investment and international reserves, whereas the slowest growth was in banking. These trends are not driven by China, any particular South region, or offshore financial centers. South-to-South investments grew the fastest even after controlling for regional GDP growth. The extensive margin played a significant role in the growth of
investments within the South.
Paper nr. 180
Title: DISCRIMINATION OF IMMIGRANTS IN MORTGAGE PRICING AND APPROVAL: EVIDENCE FROM ITALY
Authors: Paolo Emilio Mistrulli, Md Taslim Uddin, Alberto Zazzaro
Abstract: In this paper, we explore empirically whether immigrants, other things being equal, pay
more for mortgages than natives and whether the probability that banks approve their
loan applications is systematically lower. To this aim, we use two extensive and unique
dataset of mortgage contracts and banks' requests for initial information about potential
mortgagors drawn from the Italian Credit Register for the period 2011-2016, and survey
data from the Survey on Household Income and Wealth conducted by the Bank of
Italy for the period 2006-2016. We find that immigrants pay 20-24 basis points more than
native Italians on single-name mortgages and 28-40 basis points more on jointly-owned
ones. This interest rate gap narrows significantly, but does not disappear, when immigrant
borrowers' credit history lengthens or if they borrow from a cooperative bank.
Finally we find that immigrants have a 2.7% smaller chance of getting a mortgage compared
to natives, which decreases for mortgage applications submitted to cooperative
banks. Overall, our findings suggest that the disparity of treatment of immigrants in the
Italian mortgage market is mostly due to a greater difficulty of banks in assessing the
credit-worthiness of culturally distant borrowers. However, we also detect that cultural
distance may fuel persistent disparity between migrants and natives.
Paper nr. 179
Title: HOW DO MONTHLY REMITTANCES RESPOND TO NATURAL DISASTERS IN MIGRANTS' HOME COUNTRIES?
Authors: Giulia Bettin, Amadou Jallow, Alberto Zazzaro
Abstract: The literature on the impact of natural disasters on remittances has provided mixed
evidence so far, with identification remaining a key challenge. This paper studies the
insurance role of remittances by investigating their dynamic response in the aftermath
of a disaster. We use a novel and rich panel dataset of monthly remittance flows from
Italy to 81 developing countries for the period 2005 to 2015. We find that monthly
remittance flows on average increase by 2% due to natural disasters in migrants' home
countries. The response gets significant a few months after the event and tends to
disappear within a year from the disaster occurrence. The intensity and timing of
remittances' responsiveness are heterogeneous according to the nature of the disaster,
the receiving country's characteristics, and migrants' socio-economic conditions in the
host country.
Abstract: This paper analyzes financial contagion in a banking system where banks are linked by interbank
claims and common assets. We find that asset commonality makes banking systems
more vulnerable to idiosyncratic shocks and helps to determine which interbank network
structures are resistant to contagion. When the degree of commonality is homogeneous
across banks, the most resilient structure is the complete interbank network in which each
bank borrows evenly from all the others. However, when the bank most exposed to the
defaulting bank is not the one whose portfolio is most similar to it, incomplete interbank
networks are more resilient than complete. We also show that the degree and variability of
asset commonality between banks and the way this intertwines with the cross-holdings of
interbank deposits have important implications for macroprudential regulation.
Paper nr. 177
Title: INFORMATION ASYMMETRY, EXTERNAL CERTIFICATION, AND THE COST OF BANK DEBT
Authors: Andrea Bellucci, Alexander Borisov, Germana Giombini, Alberto Zazzaro
Abstract: This paper examines how the cost of bank debt reflects public information about borrower quality, and whether such information complements or substitutes the private information of banks. Using a sample of small
business loans, and the award of a competitive public subsidy as an observable positive signal of external certification, we find that a certification is associated with a lower cost of debt for the recipients if the amount
of private information of the lender is low. As the bank accumulates more information over the course of the lending relationship with a borrower, public information loses importance and no longer has a significant effect.
Our results highlight a potential positive effect of external certification, and suggest that public and private information can be substitutes in the pricing of bank debt.
Paper nr. 176
Title: MONETIZATION, WARS, AND THE ITALIAN FISCAL MULTIPLIER
Authors: Michele Fratianni, Federico Giri, Riccardo Lucchetti, Francesco Valentini
Abstract: This paper investigates the size of Italian fiscal multipliers under different business-cycle phases over the period 2006. Using pre-WWII public defense expenditures as an instrument of total expenditures, we quantify the magnitude1872
of the fiscal multiplier. Controlling for the business cycle phase, the multiplier is higher in recessions than in expansions. Furthermore, the multiplier is higher with the joint occurrence of monetization and slackness.
Monetization alone does not exert a significant impact on the multiplier. Our results are confirmed using a timevarying parameter methodology that captures the country's structural changes over a long stretch of time.
Paper nr. 175
Title: GENDER GAP IN BUSINESS ANGEL FINANCING
Authors: Andrea Bellucci, Gianluca Gucciardi, Rossella Locatelli, Cristiana Schena
Abstract: We study the relevance of the gender of contracting parties involved in equity early-stage financing using transaction-level data on Business Angel (BA) investments around the world between 2018 and 2020. In particular, we analyze whether the gender of BA investor has an impact on the size of the financial transaction and whether female-owned businesses are disadvantaged with respect to male-owned businesses. Then, we offer insights into possible channels and underlying mechanisms that could drive BAs' behaviors. According to our findings, female-owned businesses receive less equity financing than their male counterparts. This effect is independent from the information available to BAs on the target and persists even when unobservable individual factors are taken into consideration. This disadvantage seems to be linked to male Business Angels' taste prejudice, independently from the information available to the investor. Classification-JEL:G21; G24; G32; J16; G41; M13
Paper nr. 174
Title: ALTERNATIVE FINANCING AND INVESTMENT IN INTANGIBLES: EVIDENCE FROM ITALIAN FIRMS
Authors: Gabriele Beccari, Francesco Marchionne, Beniamino Pisicoli
Abstract: This paper uses the Italian 2012 reform that introduced minibonds, a financial instrument specifically designed for SMEs, to check whether more accessible market-based finance promotes investment in intangibles. We apply a propensity score matching to address selection bias, run diff-in-diff estimates over 1,454 different samples to test our hypotheses, and use a meta-analysis to summarize the results. We find that minibond-issuing firms increase investments in intangible assets, a component difficult to finance via bank credit, more than other firms and investments in tangibles. Two mechanisms are at work: minibond issuances increase financial resources available to the firm (financial effect) and, above all, signal an improvement in business practices (reputational effect). These effects are more intense for smaller, more opaque, and bank-dependent firms. Our results are not affected by model dependence or endogeneity issues and are robust to different specifications.
Paper nr. 173
Title: JOB PROTECTION AND MORTGAGE CONDITIONS: EVIDENCE FROM ITALIAN ADMINISTRATIVE DATA
Authors: Paolo Emilio Mistrulli, Tommaso Oliviero, Zeno Rotondi, Alberto Zazzaro
Abstract: In this paper we combine administrative data from the Italian National Institute for Social Security and proprietary data from a major Italian commercial bank to analyse the impact of job protection legislation on mortgage conditions. An exogenous change in the degree of job protection against individual dismissals of workers with open-ended contracts is identified by exploiting the 2015 Labor market reform, the so-called Jobs Act, which reduced employment protection of newly hired employees in medium and large private firms. We find that the weaker job security induced by the 2015 legislation change leads to a lower mortgage amount and a lower leveraging capacity, as measured by the loan-to-value ratio. Furthermore, the effect of job insecurity is mitigated by the presence of co-mortgagors while it is amplified for young and low-income mortgagors.
