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Local banking development and income distribution across Italian provinces

Author

Listed:
  • Alexandra D'Onofrio

    (CASMEF and University of Rome Tor Vergata)

  • Pierluigi Murro

    (LUISS Guido Carli University and CASMEF)

Abstract

What are the effects of local credit institutions on the distribution of income? Why should local banking development matter for the level of inequality? We focus on how different dimensions of banking development and other characteristics of 103 provinces in Italy affect the level of inequality. Using panel estimation and data over the period 2006-2010, we find that local banking development has a significant negative effect on the Gini coefficient and other measures of inequality, i.e. higher banking development is associated with lower inequality. When considering Italian macro-areas sub-samples (North, Center, South), the result is significant only for the North; thus suggesting the existence of a nonlinear relationship between financial development and income inequality, depending on the level of development.

Suggested Citation

  • Alexandra D'Onofrio & Pierluigi Murro, 2013. "Local banking development and income distribution across Italian provinces," Working Papers CASMEF 1307, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:casmef:1307
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    Cited by:

    1. Jeremie Bertrand & Pierluigi Murro, 2018. "Is trade credit a substitute for relationship lending credit?," CERBE Working Papers wpC25, CERBE Center for Relationship Banking and Economics.
    2. Pierluigi Murro & Valentina Peruzzi, 2018. "Cooperative banks and income inequality: Evidence from Italian provinces," Working Papers CASMEF 1804, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    3. Raoul Minetti & Pierluigi Murro & Valentina Peruzzi, 2021. "Not All Banks Are Equal: Cooperative Banking And Income Inequality," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 420-440, January.
    4. Tuomas Malinen, 2016. "Does income inequality contribute to credit cycles?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(3), pages 309-325, September.
    5. Diana Barros & Aurora A. C. Teixeira, 2021. "Correction to: Unlocking the black box: A comprehensive meta-analysis of the main determinants of within-region income inequality," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 41(1), pages 123-123, February.
    6. Murro, Pierluigi & Peruzzi, Valentina, 2019. "Family firms and access to credit. Is family ownership beneficial?," Journal of Banking & Finance, Elsevier, vol. 101(C), pages 173-187.
    7. Gislain Stéphane Gandjon Fankem & Marthe Dorelle Melingui, 2021. "Le développement financier affecte‐t‐il l'inégalité de revenus en Afrique subsaharienne?," African Development Review, African Development Bank, vol. 33(4), pages 620-633, December.

    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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