Germana Giombini
Assistant Professor, University of Urbino “Carlo Bo”, Italy.
Giorgio Clacagnini
Professor, University of Urbino “Carlo Bo”, Italy.
Fabio Farabullini
Researcher, Bank of Italy, Italy.The Impact of the Recent Financial Crisis on Bank
Loans Interest Rates and Guarantees
The aim of this paper to analyze the influence of guarantees on
Italian banks’ loan pricing, by focusing on firms and sole
proprietorships. Further, it looks at the role of guarantees requirements
on interest rates before and during the recent financial crisis.
The relevance of guarantees is recognized in the New Basel Capital
Accord that foresees a specific regulation for secured loans. Moreover,
in the presence of informational opacity, collateral and guarantees are
always been considered as powerful tools useful to mitigate adverse
selection problems, that may arise at the loan origination, and moral
hazard risk that arise after credit has been granted.
The novelty of this work is the distinction between real and
personal guarantees, and the potential different role they may play in
the bank-borrower relationship as different types of borrower are
analyzed.
The impact of the recent financial crisis on the loan contract terms is
the second contribution of this paper.
This paper uses individual Italian bank and firm data drawn from
the Central Credit Register at the Bank of Italy which collects
information on bank loans equal or larger than € 75,000.
Our analysis mainly focuses on real and personal guarantees
pledged by non-financial corporations, and sole proprietorship.
We estimate a multilevel model for firms and sole proprietorships
for the period 2006-2009.
The model relates interest rate spreads charged to bank loans to a
set of variables that refer to the contract characteristics; to firm
characteristics; to bank characteristics; and to the length of the lending
relationship.