JOURNAL ARTICLE: Marco Molteni, 'Credit expansion, leverage, and banking distress: the puzzle of interwar Italy'

european review of economic history

This study analyses the relationship between lending growth, leverage, and distress at the individual bank level for interwar Italy, which experienced remarkable credit expansion in the 1920s. Novel data from archival research based on banking supervision classified documents reveals a large, albeit forgotten, crisis. A puzzle emerges: regression analysis on individual bank balance sheets indicates that leverage and lending growth are not predictors of distress. Complementary indicators show that the features highlighted in the literature on leveraged credit booms do not apply to Italy. Italy’s credit expansion was not a leverage-fuelled credit boom but a process of financial development.

Article available Open Access via this link

European Review of Economic History (European Historical Economics Society)

Published: 25 July 2023

Oxford University Press

Online ISSN 1474-0044

Print ISSN 1361-4916