Il rischio di name concentration è sopravvalutato e può ridurre redditività e qualità delle relazioni banca-impresa

This study investigates the relationship between name concentration and risk on a real-world loan portfolio of Italian SMEs. Consistently with findings in the field of security portfolios, our results suggest that the benefits of portfolio name diversification tend to exhaust quite rapidly as the number of obligors in the portfolio increases (in the case of loans to SMEs, to few thousands). Therefore, large banks may increase their current level of name concentration and may build closer and longer relations with a smaller base of clients, without suffering significant increases in name concentration risk. In doing so banks may benefit from relationship lending and cost reduction in servicing SMEs.