Operating costs of the Italian banks

Abstract

Since the war, the issue of banks’ expenses has been discussed at length in Italy, mainly in connection with the problem of the high level of interest rates banks charge for loans. Previous articles by the author sought to define the total costs of Italian banks, compare pre- and post-war conditions and describe current trends. The present article supplements these earlier works and brings them up to date. After reviewing the statistical sources and the overall cost structure, the author analyses banks’ administrative expenses. The cost of interest paid on deposits and current accounts, and total costs are then examined. Finally, the prospects for bank costs are considered. It is shown that only the operating costs can show how much the banking system is “costing” the community, as interest paid goes straight back to savers.

JEL: G21