publication . Part of book or chapter of book . Preprint . 1992

Finance and Development: The Case of Southern Italy

Fulvio Ingrosso; Riccardo Faini; Curzio Giannini;
Open Access
  • Published: 01 Jul 1992
  • Publisher: Cambridge University Press
Abstract
We look at the role of the financial sector in the context of the relatively backward regions of Southern Italy (the so-called Mezzogiorno). Commercial banks in the South typically have higher operating costs and charge higher interest rates than Northern banks. Econometric analysis on a large set of individual loan contracts suggests that borrowers in the South are considerably riskier than those elsewhere in Italy. It also indicates, however, that risk accounts for only half of the 200 basis points average North-South interest differential. The rest is largely accounted for by differences in operating costs. We argue that these findings reflect a situation in ...
Subjects
free text keywords: Credit Markets; Information; Italy; Mezzogiorno; Rationing, Market liquidity, Loan, Monetary economics, Interest rate, media_common.quotation_subject, media_common, Business, Credit rationing, Allocative efficiency, Financial market, Earnings, Monopoly, Market economy, jel:G2, jel:G3
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