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Competition and stability in the credit industry: Banking vs. factoring industries

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  • Degl’Innocenti, Marta
  • Fiordelisi, Franco
  • Trinugroho, Irwan

Abstract

Over the last decade, most credit-industries registered a decline in lending volumes, while factoring industries instead registered a substantial growth in terms of turnover. Surprisingly, only a handful of papers so far investigate factoring companies. Do factoring firms display the same stability levels of banks? Is the competition similar in factoring and banking industries? Is the relationship between competition and stability the same in these industries? Focusing on Italy (one of the largest factoring and banking markets in Europe) and using a unique dataset, we show three main results: factoring companies are (on average) more stable than banks; 2) the stability of factoring companies increase when competition declines (competition-fragility view); 3) the competition-fragility view is weaker in the factoring industry than in the banking industry. Our findings indicate that competition in the Italian credit industry was greater in factoring than in banking.

Suggested Citation

  • Degl’Innocenti, Marta & Fiordelisi, Franco & Trinugroho, Irwan, 2020. "Competition and stability in the credit industry: Banking vs. factoring industries," The British Accounting Review, Elsevier, vol. 52(1).
    • Handle: RePEc:eee:bracre:v:52:y:2020:i:1:s089083891930037x
    DOI: 10.1016/j.bar.2019.03.006
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    More about this item

    Keywords

    Banking; Factoring; Competition; Stability;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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