Valter Lazzari

This study leverages on a quasi-natural experiment to shed light on the relative merit of the cooperative versus the corporate form. In Italy, a new law forced some cooperative banks to turn into joint stocks banks. This change of ownership structure proves to be Pareto improving for all financial claimholders since it either increases or leaves the value of equity and debt of any seniority unchanged, while reducing the market-based metrics of risks. This evidence challenges the view that the demutualization increases the asset substitution risk, transferring wealth from bondholders to shareholders and heightening the firm risk profile. Therefore, a transition from a cooperative to a corporate form should not cause stability concerns in the banking industry.

The relative merit of the corporate versus the cooperative form as the optimal ownership structure for a firm remains a contentious point. We assess the effectiveness of these two alternatives by leveraging on a natural experiment provided by the Italian 2015 reform mandating the largest cooperative banks to switch to a corporate form. An event study reveals that on the news of the reform the value of equity and of debt with different seniority increased or was flat, proving the Pareto efficiency of the corporate form for all financial claimholders. A compression of the risk profiles of the banks' financial claims contributed to this positive value effect, which negates the long-held belief of demutualization as a possible cause of an asset substitution risk. In spite of its Pareto efficiency, demutualization did not emerge endogenously as the most efficient contracting solution among firm's stakeholders, which makes the case for regulators playing an active role in a demutualization process without fears motivated by stability concerns. 1 We thank all the participants to the ADEIMF 2021 Conference and Stefano Dell'Atti (our discussant) for their more than valuable suggestions. We are also grateful to Fausto Panunzi and Stefano Bonini for providing insightful comments. As usual, any remaining errors are our exclusive responsibility. ‡

The literature devoted limited attention to exploring the relationship between financial development and life insurance demand. Financial development supports life insurance supply by providing confidence in the financial system, more efficient payment systems, and higher availability of financial instruments. However, financial development reduces households' needs to save by relaxing borrowing constraints, indirectly affecting life insurance demand. We contribute by providing a demand‐driven explanation of the negative consequences of financial development on life insurance development. We find that more credit‐constrained countries have higher life insurance penetration on average. Indirectly, the role of borrowing constraints signifies the importance of life insurance policies as a financing tool in case of the realization of various background risks. This study integrates the knowledge from life insurance theory, life insurance lapse, policy loans demand, and saving under liquidity constraints literature and produces implications for researchers, policymakers, and life insurers.

Shifts in equity turnover happen on and around holidays because rationally bounded investors become distracted. Their pattern reveals a persistent equity home bias even in the Eurozone, a stress test case for the survival of this bias given the high level of economic and financial development and integration in this area. The bias is greater for small caps because investors are reluctant to hold this class of foreign asset. Our study corroborates calendar anomalies in trading volumes, but refutes the hypothesis regarding turnover sensitivity to stock returns common in the empirical and theoretical literature based on investor heterogeneity and short sale constraints. Our results reveal vanishing cost asymmetries in taking long rather than short positions.

It is common in the supervision of banks to perform and disclose a simultaneous standardized assessment of their asset quality, organizational effectiveness, strategic viability and resilience to financial turmoil. By investigating the European Central Bank 2014 Comprehensive Assessment and the stock reactions of the banks to its findings, we find that this process provides limited assistance to the market in sorting good from troubled banks. Notwithstanding, the market adjusts to these findings, since it understands that they signal the stance of supervisory policy toward banking activities, which begets the level of regulatory risk and cost for the supervised banks.

It is common practice in supervision of regulated banks to perform and disclose a simultaneous standardized assessment of their asset quality, organizational effectiveness, strategic viability and resilience to financial turmoil. Investigating the ECB 2014 Comprehensive Assessment and the subject banks' stock price reactions, we find that this process provides limited assistance to the market in sorting good banks from bad banks. Notwithstanding, the market adjusts to these findings, since it understands that they signal the stance of supervisory policy towards banking activities, which begets the level of regulatory risk and cost for the supervised banks.

Competition among stock exchanges is growing fast on trading services. Differently, competition for listing securities has so far been minimal, if not absent, especially in Europe. The purpose of this paper is to highlight the monopolistic position that many important and well-renowned exchanges around the world still maintain on offering and pricing of listing services. We first enlighten the content of listing services. We then quantify fees applied by different exchanges to companies according to their size. We consider both initial and annual fees. Our results show that US exchanges are more expensive for medium-sized firms whilst EU markets apply higher fees to the largest companies. Up to now, demutualisation of stock exchanges did not lead to the expected reduction of listing fees. Many exchanges, particularly in the EU, are still taking advantage of their exclusive control position by applying premium price policies to the largest companies in order to cross-subsidise smaller companies.