Abstract: Assessing the presence and distribution of strategic and net-zero technologies in companies is crucial for European competitiveness. However, due to the complexity and evolving nature of these technology areas, this is a challenging task. This paper presents a process for identifying and mapping strategic and net-zero technologies (as described in the Strategic Technologies for Europe Platform (STEP) and the Net-Zero Industry Act (NZIA)) in European companies. STEP and NZIA technologies are identified using text mining techniques based on the titles and abstracts of patents filed with the EPO and retrieved in PATSTAT for the years 2002 to 2022. The paper describes the classification process of STEP and NZIA technologies based on IPC codes of file patents. The IPC codes were then matched with the patent portfolio of almost 100,000 European companies to determine the company's technological profile and the distribution of these technologies by sector, geographic area, and company characteristics in the European panorama.
Paper nr. 187
Title: INSTITUTIONS AND FINANCIAL CRISES
Authors: Francesco Marchionne, Noemi Giampaoli, Matteo Renghini
Abstract: This paper examines how institutional quality affects the probability of banking and twin crises using a panel of 138 countries from 1996 to 2017. We find that better institutions mitigate the probability of financial distress. Such a shielding effect occurs unambiguously only when a synthetic index is extracted from different proxies of institutional quality aspects. On the contrary, specific measures of institutional quality show some heterogeneities. In particular, dimensions more closely related to regulatory quality and corruption mitigation decrease the probability of financial instability, while measures oriented toward social capital may have null or perverse effects. Financial structure, cultural differences, and international agreements do not affect our findings. Results are robust to several econometric exercises.
Paper nr. 186
Title: FLOODED CREDIT MARKETS: PHYSICAL CLIMATE RISK AND SMALL BUSINESS LENDING
Abstract: We document that banks charge higher interest rates on loans granted to European small and medium-sized firms located in areas at high risk of flooding. The risk premium, at 6.4 basis points on average, rises with loan duration, and in the case of smaller borrowers and local specialised banks. By contrast, at-risk firms that rely heavily on intangible and movable assets do not face a higher cost of credit, reflecting lower vulnerability to physical risk. Realised flood risk increases SMEs? financial vulnerability, as firms in flooded counties are more likely to default on their loans than non-disaster borrowers.
Paper nr. 185
Title: THE STAYING POWER OF FACE-TO-FACE IN THE GLOBAL VENTURE CAPITAL MARKET
Authors: Andrea Bellucci, Alexander Borisov, Gianluca Gucciardi, Alberto Zazzaro
Abstract: Technological advancements and globalization of venture capital (VC) point to a diminishing role
of direct face-to-face (F2F) interactions between VCs and entrepreneurs seeking funding. We show
that ability to conduct such interactions remains an important factor for segments of the VC market,
and especially for its internationalization. Using a sample of VC deals around the world, and the
staggered implementation of travel restrictions across countries in response to the spread of Covid-19
in 2020, we find that investment by foreign VCs in a country drops after it halts inbound travel.
Our analysis of possible channels suggests that information asymmetry between contracting parties
is the main driver of the importance of F2F, while technological constraints on the transmission of
information and cultural differences are less significant.
Paper nr. 184
Title: AUTHORITY, INFORMATION, AND CREDIT TERMS: EVIDENCE FROM SMALL BUSINESS LENDING
Authors: Andrea Bellucci, Alexander Borisov, Alberto Zazzaro
Abstract: This paper studies the interplay between allocation of decision-making authority and information production within a bank in the context of small business lending. Using a sample of credit lines to small businesses and changes in the overlap between decision-making authority and information production following an organizational restructuring of the bank, we show that an increase in the authority of the information-producing loan officer leads to a reduction in the use of collateral but leaves interest rates broadly unchanged. The reduction of collateral requirements is more pronounced when loan officers have tacit local knowledge or soft information or when their real authority is limited pre-restructuring. Our results highlight the effect of alignment of information production and decision-making authority on the contract terms of bank credit.
Paper nr. 183
Title: A TURNING POINT FOR BANKING: UNRAVELLING THE CHANGING LANDSCAPE OF BANKING ACTIVITY IN EUROPE SINCE THE COVID-19 PANDEMIC
Abstract: This study investigates the impact of the COVID-19 pandemic on the European banking system, focusing on lending activities and risk-taking behavior. We use a difference-in-differences (DID) approach to compare the performance of banks highly impacted by the pandemic with those operating in less affected countries. Our results indicate a negative impact on lending activities, as banks reduced their exposure to both individuals and businesses. Nonetheless, the impact on banks? risk-taking was heterogeneous, as certain banks increased their risks taking by relaxing their lending standards in order to support their borrowers, while others adopted stricter lending criteria. The reduction in total lending observed for the entire banking system is primarily driven by less capitalized banks and those with limited access to public guarantees schemes. Different characteristics, such as size, profitability, and listing status, led to varied lending behaviors during the COVID-19 pandemic, with smaller and more profitable banks exhibiting greater resilience. In summary, our findings suggest that the COVID-19 pandemic has significantly impacted the European banking system, resulting in decreased lending activities and a varied effect on risk.
Paper nr. 182
Title: THE INTERNATIONALIZATION OF CHINA'S EQUITY MARKETS
Authors: Juan J. Cortina, Maria Soledad Martinez Peria, Sergio L. Schmukler, Jasmine Xiao
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.
