However, neither side of the controversy has presented convincing empirical evidence for their claims. Private banks point towards the Italian experience to corroborate their case for privatization. Since 1990, Italy has gradually privatized its savings banks by separating the banking business from social and cultural activities, by abandoning the “regional prin- ciple,” and by enforcing a reduction of the government ownership of banks. This privati- zation is typically cited as a success story because bank profitability has increased dramat- ically in recent years, particularly at the largest banks. However, no clear-cut analysis has yet shown whether the claims made by the proponents of privatization stand up to.
