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Banking structure and Regional Economic Growth: lessons from Italy

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  • S. Usai

    ()

  • M. Vannini

    ()

Abstract

Following the literature on the comparative advantage of small versus large banks at lending to small businesses, and in light of the worldwide decline in the number of intermediaries that specialize in this type of lending associated with deregulation in the banking industry, we examine the role that specific categories of banks have played in the context of Italy’s regional economic growth. Over the estimation period, 1970-1993, which ends in the year of full implementation of the banking reform that introduced statutory de-specialization and branching liberalization, Italy featured not only a substantial presence of SME’s in the real sector, as is still the case, but also a large and heterogeneous set of credit institutions with different ownership, size and lending styles. Exploiting these peculiarities we study the role of specific intermediaries and gather indirect evidence concerning the likely effects, ceteris paribus, of the current consolidation processes. The main findings, stemming from panel regressions with fixed effects, are as follows. The overall size of the financial sector has a weak impact on growth, but some intermediaries are better than others - Co-operative banks and Special credit institutions play a positive role, Banks of national interest (basically large private banks) and Public law banks (government-owned banks) either do not affect growth or have a negative influence depending on how growth is measured. Co-operative banks were mostly small banks and Special credit institutions were all but large conglomerates with standardized credit policies, hence our results lend support to the current world-wide concerns of a reduction in the availability of credit to SME’s resulting from consolidation and regulatory reforms in the banking industry

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Bibliographic Info

Paper provided by Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia in its series Working Paper CRENoS with number 200417.

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Date of creation: 2004
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Handle: RePEc:cns:cnscwp:200417

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Cited by:
  1. Swamy, Vighneswara, 2011. "Does Government Intervention in Credit Deployment Cause Inclusive Growth? – An Evidence from Indian Banking," MPRA Paper 48100, University Library of Munich, Germany.
  2. Carole Howorth & Andrea Moro, 2012. "Trustworthiness and interest rates: an empirical study of Italian SMEs," Small Business Economics, Springer, Springer, vol. 39(1), pages 161-177, July.
  3. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers, Economic and Social Research Institute (ESRI) DYNREG02, Economic and Social Research Institute (ESRI).
  4. Andrea Vaona & Roberto Patuelli, 2008. "New empirical evidence on local financial development and growth," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 1(2), pages 147-157, December.
  5. Andrea Vaona, 2005. "Regional Evidence on the Finance-Growth Nexus," Working Papers, University of Verona, Department of Economics 30, University of Verona, Department of Economics.
  6. Marco Crocco & Fabiana Santos & Pedro Amaral, 2009. "The spatial structure of the financial development in Brazil," Textos para Discussão Cedeplar-UFMG td361, Cedeplar, Universidade Federal de Minas Gerais.
  7. Barbara Pistoresi & Valeria Venturelli, 2012. "Credit, Venture Capital And Regional Economic Growth," Department of Economics, University of Modena and Reggio E., Faculty of Economics "Marco Biagi" 0680, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  8. Andrea Vaona, 2008. "Regional evidence on financial development, finance term structure and growth," Empirical Economics, Springer, Springer, vol. 34(1), pages 185-201, February.

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