No. 1052 - Geopolitical risk, banks' exposure and supervisory assessment framework

Questioni di Economia e Finanza (Occasional papers)
by Giancarlo Mazzoni
September 2026
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This paper analyzes geopolitical uncertainty as a cross-cutting risk factor for banks, transmitted through credit, market, liquidity, funding, operational, and governance risks. Focusing on Italian less significant institutions (LSIs), it proposes a theoretical framework for assessing the impact of geopolitical shocks on banks' balance sheets and on the capital adequacy of financial intermediaries.

Geopolitical uncertainty affects banking resilience through traditional risk channels, without requiring a separate risk category. For Italian LSIs, the effects are transmitted mainly through credit quality, exposure concentration, funding, governance, and operational resilience. The proposed model helps analyse and interpret these interactions in a structured and forward-looking manner, thereby supporting supervisory activities.

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  1. 17 September 2026
    No. 1052 - Geopolitical risk, banks' exposure and supervisory assessment framework
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