The Italian Banking System and Bad Debt Issuance - Is It Systemic?
There has recently been renewed concern over the high level of non-performing loans (NPLs) in the Italian banking system and the potential for a systemic contagion. This is not a new risk and as the chart shows, the bulk of these NPLs are from loans to made to business enterprises. Most of these loans turned sour in the period between 2009 and 2013.
What does the future hold for traditional banks?
The rise of new technologies has allowed for improved mobile connectivity, cloud computing and the 'Bitcoin' phenomenon. This has led to an increasingly negative narrative with regard to the future of existing traditional banks. Newer entrants into the financial services realm such as Paypal and Square are seen as potentially successful 'disruptors' of an industry facing increased scrutiny and regulatory zeal. Venture capital companies are clamoring to invest in new peer-to-peer lending schemes, with many seeing this as the future for lending into the next decade and beyond.