Savings Protection and Banking Regulation in Italy up to Second World War.

In the economic literature, it is hard to find more widely debated topics than financial crises. They appear as a distinctive feature of the modern economy which tends to re-emerge with, in some ways surprising, constancy. Attention is justified by the more or less serious effects they can produce on the different components in the economy. Among them, banking systems tend to be, sometimes permanently, affected in their size, in assets managed, in degree of involvement of the public operator, and in terms of regulatory framework.

Bail-outs, market assistance measures typical of the lender of last resort, deposit insurance, and nationalization of failing banks, albeit not so rare, do not represent the predominant cases; interventions in the field of banking legislation following a crisis are much more frequent. They are politically popular reforms that aim to make the system more resilient when new episodes of instability occur.

This article sheds new light on the relationship between banking crisis and regulation. It examines the Italian case between post-Unification and the depression of the Thirties, when a series of regulatory cycles followed shocks in the banking system. This case highlights the limits and delays

of regulation in guaranteeing a safety net in the face of future financial distress. Attention is also drawn to the quality of banking management, an issue already emphasized by the top economists of the time, but which later moved to the background compared to the supposed effectiveness of abstract standards to measure the solidity of credit institutions.

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