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Industrial District and Local Banks: Do the Twins Ever Meet?

Author

Listed:
  • Alberto Baffigi

    () (Banca d'Italia)

  • Marcello Pagnini

    () (Banca d'Italia)

  • Fabio Quintiliani

    (Banca d'Italia)

Abstract

The paper offers theoretical and empirical insights into the links between banks and firms in industrial districts and to the way investment is financed. Theoretically, it is assumed that district-banking localism is embedded in the industrial districts� social context. District banks should thus be distinguished by such features as greater concentration of lending, greater concentration of market shares and the cooperative legal form. Counteracting forces (e.g. excessive risk taking, higher monitoring costs and the cooperative�s typical dilution of power among members) may nonetheless prevent district-banking localism from arising. The empirical analysis crosses an Istat dataset on local labour systems and industrial districts with banking supervisory data as of the end of 1991. Cooperative banks are found to concentrate their lending and to acquire larger market shares in industrial districts, though the evidence is not clear-cut. Mutual banks, on the other hand, generally concentrate their lending to small local labour systems, thereby indicating that their role as local banks is played not only in industrial districts but in non-district areas as well. Finally, in a regression analysis we find that investment by firms operating in industrial districts is more closely correlated with their cash-flow than those of non-district firms, although the pattern varies across regions and economic sectors. The conclusion is that the rise of district banking localism cannot be taken for granted and that IDs do not seem to be homogeneous entities even as far as bank-firm relationships are concerned.

Suggested Citation

  • Alberto Baffigi & Marcello Pagnini & Fabio Quintiliani, 1999. "Industrial District and Local Banks: Do the Twins Ever Meet?," Temi di discussione (Economic working papers) 347, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_347_99
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    References listed on IDEAS

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    Cited by:

    1. Francesca Bartoli & Giovanni Ferri & Pierluigi Murro & Zeno Rotondi, 2014. "Bank support and export: evidence from small Italian firms," Small Business Economics, Springer, vol. 42(2), pages 245-264, February.
    2. Pietro Alessandrini & Luca Papi & Alberto Zazzaro, 2003. "Banche, territorio e sviluppo," Moneta e Credito, Economia civile, vol. 56(221), pages 3-43.
    3. Pietro Alessandrini & Luca Papi & Alberto Zazzaro, 2003. "Banks, regions and development," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 56(224), pages 23-55.
    4. Franco A. Grassini, 2001. "La gouvernance des entreprises en Italie: un exemple de non-convergence?," Revue Finance Contrôle Stratégie, revues.org, vol. 4(3), pages 147-182, September.
    5. Paolo Finaldi Russo & Paola Rossi, 2001. "Credit constraints in Italian industrial districts," Applied Economics, Taylor & Francis Journals, vol. 33(11), pages 1469-1477.
    6. Giuseppe Parigi & Roberto Golinelli & Giorgio Bodo, 2000. "Forecasting industrial production in the Euro area," Empirical Economics, Springer, vol. 25(4), pages 541-561.
    7. Stefano Siviero & Daniele Terlizzese & Ignazio Visco, 1999. "Are model-based inflation forecasts used in monetary policymaking? A case study," Temi di discussione (Economic working papers) 357, Bank of Italy, Economic Research and International Relations Area.
    8. Marco Valentini, 2006. "Ristrutturazione del sistema creditizio, piccole e medie imprese e crescita economica nel mezzogiorno," Departmental Working Papers of Economics - University 'Roma Tre' 0065, Department of Economics - University Roma Tre.
    9. Enrico Beretta & Silvia Del Prete, 2013. "Banking consolidation and bank-firm credit relationships: the role of geographical features and relationship characteristics," Temi di discussione (Economic working papers) 901, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    banks; enterprises; business financing;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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