Governance and strategy within the financial system: tradition and innovation
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Governance and strategy within the financial system: tradition and innovation Stefano Caselli
Published online: 16 July 2010 Springer Science+Business Media, LLC. 2010
Abstract Italian banks have undergone an evolutionary process and development of corporate, retail and private banking within the Italian banking system as a response to market pressures exerted by business and private customers for a broadening and qualitative expansion of offerings and organization of available competencies. This not only refers to large enterprises, whose relations with the financial system are autonomous, on equal terms and for some time now have opened up internationally, but above all the large number of SMEs found in Italy’s economic system. Interpreting governance and strategy takes place in a broad perspective in which banks and the financial system have to deal with five significant factors today: regulations, customers, knowledge, capital and synergies. Interaction with these five factors is undoubtedly not only guided by a choice made by shareholders and managers but represents the set of decisions that mitigate ideological factors, choices concerning sustainability and social acceptance of these choices. This paper intends to explore this interaction, drawing on and utilizing the most significant studies in the Italian Banking & Finance sector, with a specific focus on relations between the financial system and businesses, that is to say, the corporate banking area. Keywords
Corporate banking Strategy Financial system Governance
1 Introduction Italian banks have undergone an evolutionary process starting from introduction of the European Banking Directive in 1993 up to the launch of Europe’s common market for financial activities. Not only has this radically changed aspects such as ownership and relative size, above all it has modified approaches to production and S. Caselli (&) Banking and Finance, Bocconi University, Milan, Italy e-mail: [email protected]
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relations with the demand system (Forestieri 2000). The underlying factor, namely, the lending-deposits combination, has evolved considerably in terms of market relations both with families and with business and institutional operators. As regards the former category, the overlap progressively diminished between the ‘deposit’ element and the need for ‘savings management’ and then broke up completely in favor of a much broader and therefore more competitive structure of product-market combinations. This includes the entire system of financial, insurance and welfare needs for specific user families, which can be broken down by asset size and quality of needs indicated. As for the second category, banks’ investment role as the unique, all-comprehensive channel for satisfying customer needs has gradually had to mediate its relative positioning in the face of both a growing demand from the corporate sector for support services (advisoring and financial consultancy) and an overall increase in the range of financial products avai
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