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The geography of banking power: role of function distance

Pietro Alessandrini (), Manuela Croci () and Alberto Zazzaro ()
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Manuela Croci: Financial Services Authority, Economics of Financial Regulation, London (Great Britain)

BNL Quarterly Review, 2005, vol. 58, issue 235, 129-167

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.

Keywords: Bank; Banking (search for similar items in EconPapers)
JEL-codes: G21 L11 L25 (search for similar items in EconPapers)
Date: 2005
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