Advanced Search
MyIDEAS: Login

Local Financial Development, Socio-Institutional Environment, and Firm Productivity: Evidence from Italy

Contents:

Author Info

  • Luigi Moretti

    ()
    (University of Padova)

Registered author(s):

    Abstract

    This paper investigates the effects of local financial development and quality of socioinstitutional environment on firmÕs productivity in Italy. We argue that social capital, judicial efficiency, and the presence of criminal organizations might impact the real economy through three channels: i) they have a direct impact through the creation of a business environment; ii) they have an indirect impact, as they are among the main determinants of private credit development and lending risk conditions; iii) they might act as constraints to the effects of financial development on the real economy through misallocation of credit to highly profitable investments. We study the Italian case, using firm level data for productivity and taking advantage of the variation in terms of banking sector development, judicial efficiency, and social capital among Italian provinces. After controlling for potential endogeneity, our empirical results confirm that the real effects of financial development are conditional on the quality of socioinstitutional environment. In particular, we find that i) a larger local banking market has higher positive effects on firm productivity when the socio-institutional environment is sufficiently developed; ii) an improvement of lending condition (reduction of lending rates) has higher effects when the socio-institutional environment is not developed. These evidences highlight that an improvement of socio-institutional environment might spur a virtuous cycle.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://economia.unipd.it/sites/decon.unipd.it/files/20130165.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0165.

    as in new window
    Length: 42 pages
    Date of creation: Jun 2013
    Date of revision:
    Handle: RePEc:pad:wpaper:0165

    Contact details of provider:
    Postal: via del Santo, 33 - 35122 Padova
    Phone: +39 +49 8274210
    Fax: +39 +49 827.4211
    Web page: http://www.decon.unipd.it/
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:pad:wpaper:0165. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Maria Manenti).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.