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Multilevel empirics for small banks in local markets

Listed author(s):
  • Aiello, Francesco
  • Bonanno, Graziella

Banking is increasingly a-spatial. However, the environment matters for small banks. Indeed, they are embedded in narrowed markets and hence benefit from proximity to their member-customers. By referring to multilevel approach, this article aims at measuring how much the performance of Italian mutual-cooperative banks is determined by both geographical (provincial level) and individual characteristics (small bank level). The effect of local markets explains 28.27% of bank heterogeneity in the empty multilevel model and 33% in the most extended model. Moreover, it is found that bank efficiency increases with market concentration and demand density and decreases with branching in local markets.

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File URL: https://mpra.ub.uni-muenchen.de/64399/1/MPRA_paper_64399.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 64399.

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Date of creation: 16 May 2015
Handle: RePEc:pra:mprapa:64399
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