This paper analyses the main microeconomic determinants of Italian banks' purchases of sovereign debt securities from 2007 to 2013, with special reference to their balance-sheet conditions. The analysis distinguishes two phases of the crisis - the period following the Lehman Brothers collapse and the sovereign debt crisis - and different types of banks (large and small). Results show that banks' specific characteristics and balance-sheet features do matter and that banks use government securities purchases to support their financial and economic conditions. The influence of the balance-sheet conditions differs according to the phase of the crisis and the type of bank.
Published in 2022 in: Journal of Banking & Finance, v. 138, Article 105575.
