This paper investigates whether competition affects the degree of optimism in recommendations on Initial Public Offerings (IPOs) issued by affiliated sell-side analysts. Competition is measured by the number of unaffiliated analysts covering the IPO. Since the measure of competition is likely to be endogenous, it is instrumented using the number of analysts who cover stocks in the same industry as the IPO, one quarter before the one in which the recommendation is issued. The results show that affiliated analysts issue less optimistic recommendations when more unaffiliated analysts cover the IPO, suggesting that competition has a causal effect in mitigating the incentives of affiliated analysts to issue favorable investment recommendations. The paper also shows that recommendations issued by analysts affiliated with co-managers of the IPO are significantly less optimistic than those issued by analysts affiliated with the lead underwriter, and that competition affects only the degree of optimism of the latter.

Using data from the Italian Credit Register we identify the adverse effect of the freeze of the securitization market on bank lending during the crisis of 2007–2008. Applying a differences-in-differences estimation to data on firms that borrow from multiple banks, we single out credit supply by including firm fixed effects. Our results show that the degree to which banks tightened credit supply to nonfinancial firms is positively related to the share of loans they securitized before the crisis. The tightening translated into lower credit growth, higher interest rates, lower probability of accepting loan applications and higher probability of relationship termination. Firms were unable to fully compensate the negative credit supply shock, which suggests that the securitization freeze played a role in reducing aggregate credit availability.

We quantify the real effects of the bank-lending channel exploiting the dramatic liquidity drought in interbank markets that followed the 2007 financial crisis as a source of variation in credit supply. Using a large sample of matched firm–bank data from Italy, we find had the interbank market not collapsed, investment expenditure would have been more than 20% higher and would have increased by around 30 cents per additional euro of available credit at the average firm. We also find that credit shocks affect the firm's value added, employment and input purchases, and propagate through firms' trade credit chains.

Monetary policy transmission may be impaired if banks rebalance their portfolios toward securities. We identify the bank lending and risk-taking channels of monetary policy by exploiting—Italy's unique—credit and security registers. In crisis times, with higher central bank liquidity, less capitalized banks react by increasing securities over credit supply, inducing worse firm-level real effects. However, they buy securities with lower yields and haircuts. Unlike in crisis times, in precrisis times, securities do not crowd out credit supply. The substitution from lending to securities in crisis times helps less capitalized banks repair their balance sheets and restart credit supply with a one-year lag.