The literature exploring the determinants of the increase in sovereign debt securities in banks’ portfolios during the crisis generally adopted a macroeconomic perspective (governments’ moral suasion, redenomination risk, etc.). This study adopts a microeconomic approach and analyzes the main bank-by-bank determinants of the purchases by investigating Italian banks’ balance sheet conditions from 2007 to 2013. The results show that banks’ specific balance sheet characteristics matter, and banks buy government securities to support their financial conditions. The high liquidity of government bonds, high yields, and convenience in terms of capital charges make them well suited to satisfying banks’ needs in periods of intense liquidity demand, declining bank profitability and loan quality, and rising capital constraints.

We provide evidence on how cultural differences affect loan pricing by using a unique data set from the Italian Credit Register. We show that immigrants pay more for credit compared with natives and that this difference is smaller for immigrants who have Italian parents and for those belonging to the Christian religion. Furthermore, we find that the gap between immigrants and natives narrows as the amount of information shared among lenders through the credit register increases. This suggests that most of the higher cost of credit paid by immigrants is due to statistical discrimination rather than taste-based discrimination. (JEL G21, J15, J71)