Corporate Governance and the Financial Crisis in Italy

Dante  Roscini

Article | Journal of Modern Italian Studies | 2014

Corporate Governance and the Financial Crisis in Italy

Abstract

The financial crisis hit Italy harder than many other Eurozone countries. In part this was due to the fact that the crisis came upon a system that was weakened by years of sub-par economic growth. One of the several endogenous factors that explain the stagnation of the Italian economy is the weak corporate governance in the industrial sector and parts of the financial one. A framework that was designed to maintain stability in the ownership of companies and of certain types of banking institutions ultimately led to an inefficient allocation of capital and to a lack of investment, which contributed to the loss of competitiveness of Italian firms in a fast globalizing marketplace.

Keywords: Corporate Governance; Financial Crisis; Italy;

Format: Print

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Citation:

Roscini, Dante. "Corporate Governance and the Financial Crisis in Italy." Journal of Modern Italian Studies 19, no. 4 (2014): 389–395.

Italy’s March 2018 elections led to a populist government that included the right-wing League and the anti-establishment 5 Star Movement. To respect their electoral promises, the two parties came up with a budget plan that provided for a public deficit at 2.4%, a figure higher than what the previous administration had promised the EU Commission. On October 23, 2018, the EU Commission rejected the plan asking Italy to revise downwards the public deficit. The same day, Italian bond yields spoke to 4-year highs, up to 3.7% as investors questioned Italy’s capacity to repay its public long-term debt, the second highest in the EU. Would the Italian government be able to implement its plan?

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Corporate Governance and the Financial Crisis in Italy

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