Journal of
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Forum | Papers » Npls sales and market reactions: who is left empty-handed?

Npls sales and market reactions: who is left empty-handed?

Mario La Torre, Gianfranco Vento, Helen Chiappini, Giuseppe Lia
March 2019 - n. 3
Keywords: Non performing loans (Npls),banche, wealth effect, bank stock prices, event study
Jel codes: G01, G10, G21

Using the peculiarity experience of the Italian banking market over the years 2014-2017, the aim of this paper is to empirically test the market reaction to Npls sales. The methodology used is event study. The research contributes to the existing literature showing that the Npls sale generates a positive wealth effect for sellers. The market seems to appreciate Npls sales, evaluating in a positive manner the benefits in terms of balance sheet clean up, liquidity and recovery of credit activity. By contrast, the market seems not showing awarenesses for the liquidity reinvestment in riskier assets and for the loss of value deriving from the gap between the price of Npls sale and Npls book value.

 

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