The impact of the reform of Italian cooperative credit banks on the mitigation of NPLs: the case of Mediocrati

Abstract

This study explores how the 2016 reform of Italian cooperative credit banks (CCBs) impacted the management and reduction of non-performing loans (NPLs), with an in-depth focus on Mediocrati CCB. Set against the backdrop of increased credit risk following global financial crises, the research applies a difference-in-differences approach and longitudinal internal data analysis to assess the transition to group structures and the role of multi-originator NPL securitization, particularly through the Iccrea-led GACS scheme. Findings show that the centralized governance and risk management strategies of the reform substantially reduced NPL volumes and improved key bank ratios. The Mediocrati case highlights that group membership provided significant benefits in asset quality and financial reputation, enabling even small local banks to access economies of scale and specialized technical support. These results suggest that the Italian cooperative banking model offers an effective template for advanced NPL mitigation, combining centralization and local engagement. The study concludes that such reforms strengthen both the resilience of cooperative banking networks and the economic sustainability of individual institutions, supporting them through more industrial­ized, yet socially anchored, risk management approaches.