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The geography of banking power: role of function distance

Author

Listed:
  • Pietro Alessandrini

    (Università Politecnica delle Marche, Dipartimento di Economia, LABIS - Laboratorio Banca Impresa e Sviluppo territoriale, Ancona (Italy))

  • Manuela Croci

    (Financial Services Authority, Economics of Financial Regulation, London (Great Britain))

  • Alberto Zazzaro

    (Università Politecnica delle Marche, Dipartimento di Economia, LABIS - Laboratorio Banca Impresa e Sviluppo territoriale, Ancona (Italy))

Abstract
In this paper we analyse the new geography of the Italian banking system on the basis of the integration pressures of recent years. The analysis of the evolution of thebanking system is focused on the concept of distance. In particular, we not only refer to the traditional distance between bank and customers, that is the operationaldistance, but also to the distance between decision centres of banks and local systems, that we define as functional distance. The focus of the paper is on the effect that functional distance (or proximity) has on the performance of banks in terms of credit allocation, efficiency, and profitability. Our regression analysis proves that functional proximity has asymmetric territorial effects on the banks performance. Its beneficial effects are more evident in the less developed southern regions, than in the more advanced Centre-North regions of Italy.

Suggested Citation

  • Pietro Alessandrini & Manuela Croci & Alberto Zazzaro, 2005. "The geography of banking power: role of function distance," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 58(235), pages 129-167.
    • Handle: RePEc:psl:bnlqrr:2005:31
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    More about this item

    Keywords

    Bank; Banking;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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