“ evolving landscapes of bank and non - bank finance ” banca d ’ italia - lti @ unito conference panel on “ institutional investors ’ asset allocation and the real economy ” opening remarks by the deputy governor of the bank of italy fabio panetta carlo azeglio ciampi centre for monetary and financial education rome, 7 december 2018 i am very happy to be here today at this joint banca d ’ italia - long - term investors conference on the evolving structure of bank and non - bank finance. as the first session already highlighted, the conference provides useful indications on how to stimulate firms ’ access to market finance, alongside the traditional banking sector. my role today is to chair the roundtable on “ institutional investors ’ asset allocation and the real economy ”, which focuses on how institutional investors can contribute to expanding the range of services and the volume of financial resources available to businesses. the panel will benefit from the contributions of distinguished participants, who will share their experience in the field with us. but before we start the discussion, let me briefly explain why, in my view, it is crucial that institutional investors play a larger role in funding the real economy. the global financial crisis of 2008 was triggered and amplified by developments in the banking industry. 1 in the preceding years, banks had increasingly adopted the “ originate - to - distribute ” model, so that instead of holding the loans they had originated on their balance sheets, they transferred them to third parties. this weakened incentives to carefully screen and monitor debtors. loans were repackaged and passed on to other entities, but in many cases the risks ended up being borne by banks ’ off - balance sheet vehicles and conduits. the rapid expansion of the banking system made the real economy highly vulnerable to financial shocks. the risks connected with an overstretched banking sector emerged fully during the financial and sovereign debt crises. since then, regulatory action has been taken to rein in the banking sector. wider and tighter prudential requirements at the global level2 and, in europe, the single supervisory brunnermeier, m. k., “ deciphering the liquidity and credit crunch 2007 – 2008, ” journal of economic perspectives 23 ( 2009 ), 77 – 100. the main regulatory changes adopted after the crises include higher capital requirements, the introduction of liquidity requirements and a minimum leverage ratio. mechanism, the single resolution mechanism and the bank recovery and resolution directive are acting to discourage excessive risk taking by banks. the burden of bank

that has received wide scholarly attention is family ownership. in general, family firms are characterised by lower agency exchanges and conflicts, resulting, on one side, in more information sharing between owners and managers and yet, on the other side, in more conservative decisions, often leading to less innovation and lower firm growth. – entrepreneurs play a key role, especially in new businesses, in introducing new products, processes and organisational approaches. however, they face the difficult task of choosing the appropriate managers. the potentially limited pool of talented managers can make for a lack of managerial skills, which is often behind the poor performance of even promising firms. – modern management practices deal with the design of monitoring and incentive schemes that are conducive to an efficient organisational structure. much of the productivity gaps, across firms both within and between countries, has recently been attributed to differences in management practices. what has, perhaps surprisingly, emerged is that their quantitative effects are comparable to those brought about by differences in r & d investments, in the adoption of information and communication technologies or in the level of education and skills of employees. • these issues require special attention from both policy - makers and the academic community and are particularly relevant for the italian economy. we know how extraordinarily large the number of small and very small enterprises in italy is. we also know that the share of italian family - owned businesses is similar to that of other european countries. however, the incidence of family management is remarkably higher in italy. in the selection of managers, family background, social and political connections often appear to hold more weight than competence, managerial skills and education. this also tends to hamper corporate performance due to the lack of openness to external talent and modern management practices, leading to lower firm efficiency and weak propensity to innovate. • the recent pandemic – a human tragedy with enormous costs for the economy and society at large – has impacted firms by inducing substantial and rapid changes in the business environment and in their activity. even if we still do not have a sufficient understanding of the lasting effects on sectors of activity and production patterns, there is no question that companies with a greater ability to adapt and swiftly re - deploy resources will experience higher chances of survival. in these extremely uncertain times, intangible capabilities – such as creativity, innovative thinking, and openness to change – will be crucial factors, highlighting the central importance of managers in leading the firm through the storm. there is indeed some very recent evidence to