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Banking integration and (under)development: A quantitative reassessment of the Italian financial divide (1814-74)

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  • Chiaruttini, Maria Stella

Abstract

When in 1860 Southern Italy was annexed to the Kingdom of Italy, it suddenly found itself within a larger national market characterised by high levels of public debt, a new currency and increased competition in banking. Monetary problems, the depreciation of public bonds and the loss of pre-eminence of the Southern public banks to the advantage of the Piedmontese National Bank, the predecessor of the Bank of Italy, are increasingly often taken as evidence of the harmful effects of financial integration on the Southern economy. This paper, focusing on the banking side of the story, argues, on the contrary, that the South benefited significantly from its integration with the North and that the relative underdevelopment of its credit markets was not due to a policy of 'internal financial colonialism' pursued by Northern capitalists with the backing of the Italian state, but to different economic conditions and the long-lasting impact of the poor banking policies implemented under the Bourbons.

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  • Chiaruttini, Maria Stella, 2020. "Banking integration and (under)development: A quantitative reassessment of the Italian financial divide (1814-74)," IBF Paper Series 03-20, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    • Handle: RePEc:zbw:ibfpps:0320
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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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