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Using bank-level data on 491 Italian banks over the period 2006-2012, we investigate the impact of functional and geographic diversification on bank performance during 2008’s financial and 2010’s sovereign debt crises. Both scenarios negatively affect bank profitability while discordant effects emerge in case of the Z-Score analysis. Italian banks’ risk stays unaffected by the 2008’s episode, while the sovereign debt crisis increases such risk. Results differ for the sample of mutual and not-mutual banks being the different banking groups characterised by different size and business models

Crowdfunding is helping to drive financial inclusion by expanding the availability of funds to traditionally excluded and underserved groups of individuals, such as ethnic minority and female entrepreneurs. This study verifies how ethnic and gender similarity between investor and entrepreneur can affect the invested amount in an equity crowdfunding campaign. Using an integrated approach with linear regression and Shapley decomposition, we analyze 8600 investments made by 5996 unique personal shareholder investors in 81 equity crowdfunding campaigns. Results show that similarity patterns seem to significantly influence the amount invested in a campaign but their effects change according to investor’s gender and ethnic origin. In fact, even if female investors give a higher amount to men-led companies, their preference changes if the company is run by a female founder belonging to the same ethnic minority group. Results emphasize equity crowdfunding’s potential as a tool for the financial inclusion of ethnic minority groups of investors and entrepreneurs.

This paper aims to stress the importance of market liquidity for the stability of the financial system, emphasizing the pivotal role played by liquidity risk in the development of the current financial crisis, pointing out the flaws of regulation and supervision and stressing the need for their reform. We first investigate the evolution of the concept of liquidity and the nexus between the transformations of financial systems and their increased vulnerability to liquidity risks. Then we focus on the causes of the emergence of liquidity risk in the ongoing financial crisis. We point out two intertwined processes: firstly, the huge increase in financial assets stemming from the shift to an "originate-to-distribute" intermediation model; secondly, the growth of a parallel financial circuit. After this, we focus on the main lessons for regulation and supervision: first of all we address the case for adjustments to or reform of Basel 2 in view of the nexus between solvency and liquidity. Further crucial points relate to market liquidity and OTC markets, scale and scope of LLR function, architecture of supervisory authorities and perimeter of controls. Finally we stress the need for harmonization, or at least coordination, of national liquidity regimes, at least for cross-border groups.

Using a proprietary database of lending decisions (N = 9,898) for small and medium‐sized enterprises (SMEs), the paper investigates how banks cope with the adverse selection dilemma. Based on an intertemporal framework, we qualify incorrect and correct lending decisions of banks and investigate the power of lending technologies to predict errors and correct choices. Findings suggest that adverse selection can be better controlled by a durable bank–firm relationship, as well as by an atomistic loan decision process, at the local level. By contrast, a loan decision‐making process based exclusively on hard financial information about SMEs may lead to adverse selection errors.