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A 'possibilist' approach to regional banking systems and financial integration: The Italian experience

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  • Pietro Alessandrini

    ()

  • Alberto Zazzaro

    ()

Abstract

Over the last ten years there have been great strides made in the analysis of the regional structure of banking systems and financial integration both from the theoretical and empirical point of view. Experience shows that the financial structure tends to be hierarchical with an advanced financial centre at the top and local credit systems becoming gradually less advanced depending on the peripheral regions in which they operate. It is essential to recognise and deal with this fact and to consider the question of financial integration between the global and the local or, to be more exact, between the centre and the periphery. There are three basic ways to approach this question. The first two approaches present two well-known opposite views concerning the effects of integration: one is pessimistic and the other optimistic. In our opinion a third point of view, which we will call "possibilist", falls midway between the two extremes and offers a more realistic and accurate picture of the situation. The first two theories, widely discussed in the literature, have certain points in common. In particular, both emphasise a strong contrast between centre and periphery and attempt to ignore one of the two poles in the conviction that the other will prevail.The pessimistic theory concentrates exclusively on "localism". It maintains that the centre would take advantage of asymmetries in information, behaviour and structure and would invest the savings drained out of the peripheral regions and in this way slow down their development. This could lead to the radical conclusions that local segmentation of capital markets is preferable to integration. The optimistic theory concentrates exclusively on "globalisation". The hope is that higher competition will select the best enterprises (banks, firms) and standardise their performance at the levels of efficiency reached in the more advanced centre. This opinion leads one to believe that every region can become a centre in the hope of exorcising its peripheral nature. In our opinion, it is wiser to adopt what we call a "possibilist" or "open" approach. It is based on the continual exploration of the possibility of co-existence, complementarity, and interaction between different areas and therefore also between the centre and periphery. The territorial integration of local financial systems, which should not be disputed, must be carried out in a selective and gradual way, by trying to give preference to solutions that are best suited to the characteristics and assimilation ability of local firms and individuals. The paper deal with these questions by focusing our attention on the experience of the Italian banking system.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa98p132.

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Date of creation: Aug 1998
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Handle: RePEc:wiw:wiwrsa:ersa98p132

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  1. Vives, Xavier, 1990. "Banking Competition and European Integration," CEPR Discussion Papers 373, C.E.P.R. Discussion Papers.
  2. Gerhard CLEMENZ, 1989. "Loans for Projects with Interdependent Returns," Vienna Economics Papers vie8905, University of Vienna, Department of Economics.
  3. Lang, William W. & Nakamura, Leonard I., 1990. "The dynamics of credit markets in a model with learning," Journal of Monetary Economics, Elsevier, vol. 26(2), pages 305-318, October.
  4. Domenico SCALERA & Alberto ZAZZARO, 1997. "Reputazione di gruppo e discriminazione nel mercato del credito: un modello dinamico con apprendimento," Working Papers 97, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. Pietro ALESSANDRINI, 1996. "I sistemi locali del credito in regioni a diverso stadio di sviluppo," Working Papers 81, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. Damien NEVEN & Claudine GOUYETTE, 1993. "Regional Convergence in the European Comunity," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9311, Université de Lausanne, Faculté des HEC, DEEP.
  7. Chiappori, Pierre-Andre & Perez-Castrillo, David & Verdier, Thierry, 1995. "Spatial competition in the banking system: Localization, cross subsidies and the regulation of deposit rates," European Economic Review, Elsevier, vol. 39(5), pages 889-918, May.
  8. Joseph E. Stiglitz & Andrew Weiss, 1988. "Banks as Social Accountants and Screening Devices for the Allocation of Credit," NBER Working Papers 2710, National Bureau of Economic Research, Inc.
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Cited by:
  1. Alberto Zazzaro, 2001. "Specificità e modelli di governo delle banche: un' analisi degli assetti proprietari dei gruppi bancari italiani," Moneta e Credito, Economia civile, vol. 54(216), pages 487-517.
  2. Pietro ALESSANDRINI & Andrea PRESBITERO & Alberto ZAZZARO, 2006. "Banks, Distances and Financing Constraints for Firms," Working Papers 266, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Pietro Alessandrini & Manuela Croci & Alberto Zazzaro, 2005. "The geography of banking power: role of function distance," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(235), pages 129-167.
  4. Pietro Alessandrini & Andrea Filippo Presbitero & Alberto Zazzaro, 2008. "Global Banking and Local Markets," Mo.Fi.R. Working Papers 4, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  5. Zoltán Gál, 2001. "Challenges of regionalism: Development and spatial structure of the hungarian banking system section: Financial issues," ERSA conference papers ersa01p43, European Regional Science Association.
  6. Gál, Zoltán, 2000. "Challenges Of Regionalism: Development And Spatial Structure Of The Hungarian Banking System," ERSA conference papers ersa00p159, European Regional Science Association.
  7. Pietro Alessandrini & Andrea Filippo Presbitero & Alberto Zazzaro, 2008. "Geographical Organization of Banking Systems and Innovation Diffusion," Mo.Fi.R. Working Papers 3, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  8. Bertocco Giancarlo, 2003. "The role of banks in financing small and medium firms," Economics and Quantitative Methods qf0308, Department of Economics, University of Insubria.

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