Measuring the banking activity of Italian banks by functions of accounting utility

Abstract

The accounting utility function of Italian banks is a measure of their risk positions in an Edgeworth box, which acts as a laboratory for measuring the decision-making of the entities. Positions are accounting equations obtained from the dynamic activity of entities. The sum of net financial transactions and variations of economic assets equal to the sum of monetary savings and operating results is an annual equation. The asset and liability variables are respectively the y-axis and the x-axis of the Edgeworth box. The measure of dispersion the accounting positions transferred on Cartesian axes multiplied by the relationship between their efficiency and effectiveness is annual accounting utility. The dispersion of module and the Hessian normal length are contrasted to verify the measurement results of the accounting utility function. The conclusion justifies the application of the accounting methodology of the manuscript to evaluate European monetary policy in Italian banking activity.