of the firm and the costs connected with the transparency requirements for listed companies, including their tax implications, deter many entrepreneurs from seeking a listing. regulation must seek to strike a balance between safeguarding investors and minimizing the costs for firms. it is up to the entrepreneur to assess the opportunities offered by stock exchange listing, which detracts nothing from his passion or creativity ; on the contrary, in difficult moments of transition, it can represent a compromise between keeping all the capital in his own hands, thereby sacrificing the opportunities for growth, and relinquishing control entirely. development of the markets requires rapid and effective protection of minority shareholders from opportunistic or non - transparent behaviour. prevention must be able to rely not only on primary and secondary legislation and its application by the supervisory authorities, but also on the autonomous initiative of operators in the market : banks, rating agencies, investors. there is ample scope for selfregulation and shareholder activism. if this is not fully exploited in italy, it is partly because institutional investors carry little weight. their voice, which is strong and insistent elsewhere, is faint in italy. their presence contributes to the assessment of the quality of corporate management, the protection of minority shareholders and the correct handling of conflicts of interest ; it deepens the market and increases its allocative efficiency ; it facilitates the placement of equity capital and the spread of long - term financial liabilities. where institutional investors play a more prominent role, the average size of the companies that seek a listing is smaller. pension funds in particular have great potential for growth in italy. in the most advanced financial systems they are among the main investors in listed shares. in the united states they hold about one fifth of the market capitalization, corresponding to roughly one third of gdp ; in italy the proportion is close to zero. the financial assets managed by italian pension funds amount to 2. 1 per cent of gdp, those of funds created after 1993 to 0. 8 per cent. more rapid expansion is necessary. the income replacement delivered by the public pension system will decline in the decades ahead as a consequence of the reforms introduced in recent years. the rapid growth of supplementary pension schemes is essential to provide adequate incomes for future generations of retirees. in addition to workers ’ contributions, it will be necessary to use the flow of resources now set aside for severance pay, which for the private sector amounts to approximately 1. 5 per cent of gdp per year. the advantages for workers are likely

the last five years the return on capital and reserves, namely the return on equity ( or roe ), of our banks has been virtually nil, while in the euro area roe has been just under 2 per cent and in the united kingdom it has hit 3 ; in the united states it has reached as much as 9 per cent. italian banks have not only had to make enormous write - downs of non - performing loans on their balance sheets, they have also had to bear higher costs than in other countries. up to now, traditional lending, especially when concentrated around smaller customers, has obliged banks to allocate a large amount of human resources per unit of revenue ; moreover, for our major banks labour productivity, expressed as the value added per employee, is modest, averaging €124, 000 over the last five years, compared with €170, 000 for a sample of large european groups with similar business models. the low interest rate environment, created the world over by monetary policies, has squeezed interest margins and reduced profits. although this is a global phenomenon, italian banks have suffered more than those of other countries owing to their traditional business model : for several years their roe has been much lower than the cost of capital, which does not make it easy for them to find new funding on capital markets. as we see, italy ’ s entire financial structure is in difficulty. despite the progress made in recent years, we still have companies that are poorly capitalized ( as well as too small on average ) and a bloated banking sector within the financial system. and yet the overall size of italy ’ s financial sector is no greater than that of other advanced countries. on the contrary! at the end of last year, the financial debt of the private sector ( excluding banks and other financial entities ) was below 120 per cent of gdp, compared with around 160 per cent in the euro area, the united kingdom and the united states. but, for our companies, equity finance accounts for only 46 per cent of their total liabilities, compared with an average of 53 per cent in the euro area. moreover, they turn mainly to banks rather than to financial markets or non - banking intermediaries : bank loans represent more than 60 per cent of firms ’ financial debts, while the euro - area average is not even 40 per cent and in the united states and the united kingdom it is one third. as a result, italian banks, even the largest ones, have specialized in retail lending to firms