University of Hertfordshire

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Original languageEnglish
PublisherUniversity of Hertfordshire
Publication statusPublished - 2006

Publication series

NameBusiness School Working Papers
PublisherUniversity of Hertfordshire
VolumeUHBS 2006:11

Abstract

This paper investigates whether local differences in banking competition impact on the creation and activity of firms, with a special focus on cooperatives. The econometric analysis, implemented on a sample of firms operating in the Italian provinces during the years 1998-2003, reveals non-monotonic effects of bank market power on both firm creation and activity. With regard to the former, a bell-shaped relationship is found for both cooperative and--non-cooperative firms, suggesting that a moderately concentrated banking market tends to favour firms creation, regardless of their legal structure. A less homogeneous pattern emerges for firms activity rate. Indeed, the relationship between bank market power and firm activity rate continues to assume a bell-shaped form in the case of non-cooperative firms. By contrast, a U-shaped parabola is found for cooperatives, showing that active coops in the market benefit from a relatively more intense banking competition.

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