3/7  BIS central bankers' speeches  Economists Fabiano Schivardi, Enrico Sette and Guido Tabellini have shown how the health of the banking system influences capital allocation.12 They estimate that credit misallocation in Italy reduced annual GDP growth by between 0.2 and 0.35 percentage point in the 2008 to 2013 period. What can be done to improve capital allocation?
In addition to new regulations, the crisis brought about important changes in supervision. Supervisors are taking a macroprudential approach to their responsibilities. Rather than focusing on the risk in a single institution, supervisors are spending more time analyzing risks across firms. Large financial firms are now required to have stronger data and information systems so they can better monitor and manage their own risks.