Does institutional quality matter for lending relationships? Evidence from Italy

Nifo, Annamaria and Ruberto, Sabrina and Vecchione, Gaetano (2016): Does institutional quality matter for lending relationships? Evidence from Italy. Forthcoming in:

Abstract

Why the number of banking relationships per firm varies so much across space? Is it simply due to microeconomic features of firms localized in different regions or is there instead something connected to microeconomics and macroeconomic factors? Can the institutional endowment of a region affect the number of bank-firm relationships? We seek to answer these questions with reference to the Italian case, one particularly interesting because of the substantial institutional gap between Center-North and South and the high average number of banking relationships per firm. We investigate the role of institutional quality in determining firms’ choices and, consistent with previous studies, find that institutions are a basic determinant of the observed differentials in the number of firms’ banking relationships among different Italian provinces.

• Item Type: MPRA Paper
• Language: English
• Keywords: Firm-Bank relationship, Institutional quality, Italian manufacturing, SMEs.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G20 - General; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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