No. 1004 - Corporate lending by Italian less significant institutions: an empirical analysis
Over the past decade, the default rate of loans to firms granted by Italian less significant institutions (LSIs) has been higher compared with that of significant institutions (SIs). Using data on a large set of corporate loans, this paper assesses whether this gap can/is to be attributed to specific characteristics of borrowing firms or of the loans themselves. It also examines whether, with the same characteristics, the interest rates applied by LSIs are aligned with those charged by SIs.
The gap observed in default rates is largely attributable to the greater share in LSI portfolios of loans granted to smaller firms with higher risk profiles; other characteristics of borrowers and loans also contribute to the difference. All things being equal, the interest rates applied by LSIs appear to be broadly aligned with those charged by SIs.
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12 March 2026
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