When Credit Growth Diverges: Common Dynamics and Regional Heterogeneity in Italy

Claudio Barbieri, Mattia Guerini and Mauro Napoletano
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Claudio Barbieri: European Central Bank
Mattia Guerini: Università di Brescia
Mauro Napoletano: Université Côte d'Azur, CNRS, GREDEG, France

No 2026-13, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: We investigate the structure and evolution of credit growth across Italian provinces. Using an econometric approach based on Random Matrix Theory, we decompose regional credit dynamics into common and idiosyncratic components. We use a longitudinal dataset of credit at the provincial level (NUTS-3 regions) covering the period 2000–2020 and document substantial heterogeneity in the synchronization of credit growth across local economies. Our results suggest that, while aggregate credit growth is largely driven by a strong common component, substantial heterogeneity emerges across disaggregated credit categories. Household mortgage lending displays strong and persistent co-movement across provinces, whereas corporate mortgages and unsecured credit are characterized by higher dispersion and relatively weaker common dynamics. Regional divergence intensifies sharply between 2010 and 2014, coinciding with the European sovereign debt crisis, suggesting a fragmentation of local credit supply and demand. Importantly, divergence does not display any clear geographical pattern, underscoring the role of non-spatial factors in shaping regional credit dynamics.

Keywords: Credit growth; Regional heterogeneity; Local credit markets; Synchronization (search for similar items in EconPapers)
JEL-codes: C38 E51 G21 R12 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2026-05
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