The banking system and the financing of southern Italian firms

This paper investigates the territorial gap in firms’ access to credit between 2008 and 2019 and describes the functioning of the credit market in the southern regions of Italy. The southern firms are characterized by a higher level of credit risk; all other things being equal, these firms face less favourable credit conditions than others, paying higher interest rates and providing more collateral on loans. Despite this, the dynamics of loans to firms was more marked in the south with respect to the rest of the country, given the support of the southern banks, which increased lending to firms in these regions, especially to small businesses, more than other banks. During the period 2008-2019, the proportion of riskier loans of banks headquartered in the south increased; these banks are characterized by lower quality credit portfolios and lower profitability.