Papers by Vincenzo Farina
Banking regulation towards advisory: the “culture compliance ” of banks and supervisory authorities
The study of the content of the European National Central Banks, conducted through the text analy... more The study of the content of the European National Central Banks, conducted through the text analysis of hashtags, reveals that banking supervision, inflation, Monetary Union and European economic integration, corporate governance and future scenarios are some of the most relevant areas. The results also reveal the existence of some cluster of receivers such as International institutions, academics, influencers
This paper focuses on the relation between divergence of sentiment and stock market efficiency. A... more This paper focuses on the relation between divergence of sentiment and stock market efficiency. Analysing 960,808 economics blogs’ posts during a 5-years time period (from March 1, 2008 to August 31, 2013), we construct two Economics Blogs Sentiment Divergence (EBSD) indices. Our findings confirm the importance of investors’ opinion divergence in the stock market. In particular, we find a negative relation between divergence of blogs sentiment and stock market efficiency.
This chapter assesses the communication strategies of the Federal Reserve (FED) and the European ... more This chapter assesses the communication strategies of the Federal Reserve (FED) and the European Central Bank (ECB), as well as their respective effectiveness. We explore the multi-dimensional aspects of the information embedded in more than 800 statements released by the heads of the EU and US central banks. Using tools from computational linguistics, we analyse the information released by these central banks on the state of economic conditions, as well as the guidance they provide about future monetary policy decisions. First, this chapter looks at some dimensions of the communication (tone, growth, ambiguity). Subsequently, we pay attention to the scenario’s impact on the communication strategies of the ECB and FED, assessing whether these strategies are influenced by certain variables that depict the scenario of the financial and real economy. Our results confirm the title of this chapter: most of the time, there is no significant difference between the communication strategy of...
This paper identifies cultural gaps as a possible stumbling block in the efficient exchange of in... more This paper identifies cultural gaps as a possible stumbling block in the efficient exchange of information and the sharing of problems and goals among regulators and the industry, with respect to the recent innovations introduced in the financial sector, which are orienting the supervisory authorities towards the adoption of new interaction models with the supervised financial intermediares.
International Journal of Business and Management, 2020
The paper investigates the market reaction to three different events related to Brexit through an... more The paper investigates the market reaction to three different events related to Brexit through an event study analysis, i.e. the announcements of the referendum date (20 February 2016), the referendum result (23 June 2016) and the election of Theresa May as Prime Minister (11 July 2016). We study the impact of these announcements on stock prices of UK companies belonging to export- and import-oriented industries. We also investigate the influence of previous events on stock prices of European companies belonging to the same sectors. Our results show that financial markets did not perceive the announcement of the referendum date and the election of Theresa May as Prime Minister as elements of political uncertainty. However, in the days before the referendum, investors priced it as an uncertain political event. The text analysis conducted on mass media sentiment about Brexit mainly supports the results of our event studies. Stock market performance around the events depends more on in...
International Journal of Bank Marketing, 2019
Purpose The purpose of this paper is to examine whether financial consumers are sensitive to pres... more Purpose The purpose of this paper is to examine whether financial consumers are sensitive to presentational format of financial disclosure documents and whether this influences the financial attractiveness of products. Design/methodology/approach In order to observe and measure consumers’ attention, the authors exploit the unobtrusive methodology of eye tracking on a sample of nonprofessional investors, applying an ecological protocol, through a cross-sectional design. Findings The analysis reveals that financial information processing and attention distribution are influenced by the way the information is conveyed. Moreover, some layouts induce individuals to rate the products as less financially attractive, independent of the information content. This suggests the importance of studying the neural mechanisms of investors’ behaviour in the scrutiny of financial product documents. Practical implications The results lead to recommend regulators and managers to study how investors res...
Strategic frames (or cognitive maps) are the knowledge structures used by top decision makers in ... more Strategic frames (or cognitive maps) are the knowledge structures used by top decision makers in formulating firms' strategic guidelines. This study examines how board composition affects strategic framing in banking industry. Do larger boards and/or boards with more executive directors and/or more interlocking directors make differences in formulating more complex strategies? Based on a sample represented by 27 listed Italian
An empirical analysis, based on Computer Aided Text Analysis, is aimed to highlight the impact of... more An empirical analysis, based on Computer Aided Text Analysis, is aimed to highlight the impact of Bank of Italy’s communications on the behaviour of supervised subjects.The results reveal the presence of «signs of address» perceived in different ways by intermediaries and markets, especially in the areas of capital adequacy, risk management, governance, organization and internal controls.
SSRN Electronic Journal, 2007
SSRN Electronic Journal, 2005
SSRN Electronic Journal, 2008
... Franco Fiordelisi* University of Roma Tre, Dipartimento di Scienze Aziendali ed Economico-Giu... more ... Franco Fiordelisi* University of Roma Tre, Dipartimento di Scienze Aziendali ed Economico-Giuridiche Essex Finance Centre, University of Essex, UK Ornella Ricci University of Roma Tre, Dipartimento di Scienze Aziendali ed Economico-Giuridiche *Corresponding author ...
SSRN Electronic Journal, 2011
Journal of Financial Regulation and Compliance, 2010
PurposeThe purpose of this paper is to measure the cultural fit between supervisory authorities a... more PurposeThe purpose of this paper is to measure the cultural fit between supervisory authorities and banks, considering cultural gaps as possible stumbling blocks for effective supervision.Design/methodology/approachThe paper uses a text‐analysis approach. The methodological assumption is that the analysis of culture is closely connected to the analysis of the type of language used by the members of an organization. To this aim, a cultural survey was developed in order to compare cultures of Bank of Italy, Italian banks, and Basel Committee during the years 1999 and 2004.FindingsThe results highlight several significant, but decreasing, cultural gaps relating to important issues for banks, such as risk, disclosure, change, and innovation.Practical implicationsThe evidence and the measurement of cultural gaps are useful elements for the identification of change actions by supervisors and banks. In fact, identified gaps could be detrimental for an effective supervision and could be a s...
Journal of Financial Regulation and Compliance, 2010
PurposeThis paper aims to develop a model to assess the effectiveness and compliance of bank boar... more PurposeThis paper aims to develop a model to assess the effectiveness and compliance of bank boards, taking into account their unique characteristics, financial industry standards and regulations.Design/methodology/approachThe literature on the roles and effectiveness of boards and directors in the financial industry is reviewed.FindingsThe main finding in the literature suggests that evaluating the effectiveness of a board must include characteristics of the entire board as well as individual contributions of directors.Practical implicationsBanking boards, more than in the past, must proactively evaluate their effectiveness and compliance with existing rules.Originality/valueThe paper proposes a model for assessing the effectiveness and compliance of boards and directors of banking organizations, considering their characteristics, financial industry standards and regulations.
European Management Review, 2012
European Financial Management, 2010
Mass media has a significant impact on financial markets since news can contribute to the formati... more Mass media has a significant impact on financial markets since news can contribute to the formation of investor expectations Our paper analysed the relationship between the ways of communication of governance news and the investors behaviour by analysing a large sample of corporate governance news published for the period 2003-2007. Our findings show that stock returns are influenced by semantic content of corporate governance news, company performance and health and by the interaction of these variables.
Journal of Banking & Finance, 2021
A poor risk culture was one of the causes of the financial crisis. Surprisingly, there is no evid... more A poor risk culture was one of the causes of the financial crisis. Surprisingly, there is no evidence of the link between risk culture and bank stability. Using a large sample of European banks from 2004 to 2017, our paper shows that a sound risk culture leads to better performance. Our research design is based on three steps. First, we developed a new Sound Risk Culture Indicator based on the Financial Stability Board (2014) risk culture framework. Second, we estimated this new metric by applying Quantitative Text Analysis. Third, we used an IV 2SLS panel data approach to establish a causal link between bank risk culture and profitability.
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Papers by Vincenzo Farina