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The distributional impact of local banking. Evidence from the financial and sovereign-debt crises

Author

Listed:
  • Valentina Peruzzi

    (Sapienza University of Rome)

  • Pierluigi Murro

    (LUISS University)

  • Stefano Di Colli

    (Confindustria Research Department)

Abstract

This paper investigates whether local cooperative banks mitigated income inequality in Italian municipalities after the two main crises that characterized the European landscape between 2008 and 2015, i.e. the financial and sovereign-debt crises. Estimation results reveal that, although in the post-crisis periods income inequality increased, this increase was lower in municipalities with at least one cooperative bank branch. The same result, that is a mitigation of income inequality, is not found for non-cooperative banks. Also the size of the cooperative banking system mattered after the crises: where cooperative banks extended more loans and collected more deposits income inequality was lower. The distributional impact of cooperative banks after the two crises was particularly relevant in small municipalities, and where the level of industrial and financial development was higher.

Suggested Citation

  • Valentina Peruzzi & Pierluigi Murro & Stefano Di Colli, 2023. "The distributional impact of local banking. Evidence from the financial and sovereign-debt crises," Working Papers CASMEF 2301, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:casmef:2301
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    Keywords

    Cooperative banking; income inequality; financial development; financial crisis; municipalities;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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