Abstract

This paper analyses the recent developments of the Italian banking system compared to a wider European context characterized by encouraging signs of recovery which in Italy seems more uncertain. In this regard, the paper considers the criticalities of Italian banks with one of the highest level of bad debts in proportion to the investments in the Eurozone countries. The difficulties that banks face on the quality of investments reflect on their ability to adequately support the production system through a strong recovery of credit. The analysis highlights that the criticalities of the banking system and its difficulty in sustaining recovery continue to be to some extent intense in Southern Italy, where there is a riskier business system since it is more fragmented, less prone to international markets and more dependent on the dynamics of the domestic market, for which bank credit is still the main source of financing for production.