We study the retail distribution of financial products by the Italian banking system between 2010 and 2017, focusing on three instruments: mutual fund shares, insurance contracts and individually managed portfolios. The econometric analysis investigates the characteristics of the banks that distribute these instruments the most and the contribution of each product to bank profitability.
Banks with larger amounts of bad loans relative to equity distribute more asset management instruments, an activity that does not absorb equity. Moreover, the distribution of financial products is less intense for banks with stronger lending specialization. Finally, fees from the distribution of individually managed portfolios contribute to bank profitability more than those from the distribution of mutual fund shares.
