Banks: After Covid, the Challenge Is to Support Innovation in Companies

The Italian banking system has been able to meet the demand for loans coming from companies during the recent pandemic. Banks, thanks in part to guaranteed public loans, have not been part of the Covid problem and, indeed, have played a crucial role in the restart of the country's economy. Now, however, there is another challenge that needs to be faced: knowing how to select and support those companies that stand out for their innovative potential, in order to intercept and feed the new post-emergency dynamism. Only in this way will Italy be able to emerge from the so-called Great Financial Crisis, whose legacy is yet to be determined, if we broaden the analysis to all of the eurozone and take a medium-term perspective. "The necessary commitment is twofold: banks must focus their attention on the territory while SMEs are required to push their degree of innovation decisively", explains Marco Onado, Bocconi University Department of Finance, who has written "Italian banks, the legacy of the Global Financial Crisis and the COVID-19 pandemic: so far so good", together with Alfredo Macchiati, Simone Negro and Luigi Stammati of Oxera Consulting.

The greatest returns yet to be reaped, in terms of labor productivity growth, could concern, for example, health care, construction, ICT and retail, but the fundamental condition is that an efficient allocation of credit is ensured, according to the authors of the paper. However, the shadows of the past place a burden on the ability of the Italian banking system to succeed, considering first of all the absence of consolidated relationships between companies and individual banks, given the Italian corporate habit of opening various lines of credit with different institutions, and also instances of non-transparent credit management.

"Today, I don't think that the risk of the so-called zombie companies, which remained on the market only thanks to loans, is so high anymore," continues Onado. "Nor do I think we should wait for the end of the banking concentration process which we are currently witnessing in Italy. In general, the structure of our banking system is the one we have now. If anything, it is important to continue to support the fourth wave of capitalism, considering the scarce presence in our economic fabric of large companies, which are often synonymous with innovation", concludes Onado. "The role of public institutions? For example, upstream in the credit market, a targeted policy of the Bank of Italy could better support local banks".