Since the days of the Greek financial crisis, investors have frequently wondered which Eurozone shoe would be the next to drop. Italy has often been mentioned as that shoe and that sentiment has become widespread in recent months.
Italian banks’ bad loan problem has “become more pressing during years of economic stagnation. A highly fragmented and inefficient industry doesn’t help — Italy has more than 600 banks, supporting 52 bank branches for every 100,000 adults. Germany has 14 bank branches per 100,000 adults, and the United States 38,” according to CNN Money.
While Italy’s economy is stagnating, making matters worse is the fact that some agencies do not expect that trend to reverse course anytime soon.
“In Sunday’s referendum, voters will decide on whether to approve changes to the country’s constitution. However, the vote is largely being viewed as a vote of confidence in Prime Minister Matteo Renzi. If the “no” side wins, there is a possibility that he will resign and the government will be dissolved,” according to MarketWatch.
For more information on Italy, visit our Italy category.