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Banking Diversity, Financial Complexity and Resilience to Financial Shocks: Evidence From Italian Provinces

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Abstract

In this paper we investigate the influence of banking and financial diversity on stability. We compute an index of banking diversity for Italian provinces and, drawing from network theory, we propose a measure of the diversity and development of the overall provincial financial sector. Our results show that diversity in the banking and financial markets promotes greater stability. Such beneficial effects are particularly evident during periods of financial distress. We ascribe our findings to the better diversification achieved by more diverse financial systems, as documented by lower loans concentration and higher loans diversification in terms of economic destination and borrower category.

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  • Beniamino Pisicoli, 2021. "Banking Diversity, Financial Complexity and Resilience to Financial Shocks: Evidence From Italian Provinces," CEIS Research Paper 526, Tor Vergata University, CEIS, revised 09 Nov 2021.
  • Handle: RePEc:rtv:ceisrp:526
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    Keywords

    financial diversity; financial stability; non-performing loans; financial complexity; financial crises; banking diversity;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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