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Forum | Papers » Compliance impact on costs and margins of Italian banks

Compliance impact on costs and margins of Italian banks

Domenico Piatti
June 2011 - n°6
Jel codes: D18; G21; G28; G33; G38

The paper examines the cost of complying with Ias and Basel 2 regulations and the impact on net interest margin and operating costs of Italian banks. To enquire, regressions on balanced panel data have been used, including 431 Italian banks of which 344 are mutual banks, for the period 2001-2007.The empirical analysis shows that compliance costs have affected operating costs and net interest margin. Moreover, mutual banks did not face a cost disadvantage in complying with Ias and Basel 2 regulations, thanks to the option for Basel 2 standard approach and to the presence of the mutual bank network which enables them to exploit economies of scale.

 

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