April 6, 2017 – In his contribution to the OMFIF Bulletin, SEP Senior Fellow Lorenzo Codogno argues that the lack of protection for minority shareholders in Italy has become an increasingly apparent problem, hurting the country’s ability to attract foreign investment. The Italian Securities and Exchange Commission (Consob) has attracted criticism for its failure to apply the rules, and, in his opinion, the mistreatment of small shareholders in relation to Banca Monte dei Paschi di Siena (MPS) and the struggling banks in the Veneto region goes beyond ordinary mistakes. More marked is the lack of any public explanation for Consob’s inaction. Recent studies show that countries with effective protection for minority shareholders tend to attract less risk-averse investors, resulting in more robust financial markets. A legal framework is not enough—enforcement and the administrative ability to implement rules also matters.
- The original article is available from OMFIF.