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Bank deregulation and progress in information technology altered the geographical diffusion of banking structures and instruments, and reduced operational distance between banks and local economies. However, the consolidation of the banking industry promoted the geographical concentration of banking decision-making centres and increased functional distance between local banking systems and local borrowers. This paper focuses on the impact that these spatial diffusion concentration phenomena had on the financing constraints of Italian firms over the period 1996-2003. Our findings show that greater functional distance stiffened financing constraints, especially for small firms, while smaller operational distance did not always enhance credit availability. [ABSTRACT FROM AUTHOR]

This paper offers a methodological contribution to the empirical analysis of the relationship between banking and economic growth by suggesting a new indicator for the state of development of the banking system based on a measure of bank microeconomic efficiency. This choice helps to overcome the problem of causality and to capture the effects of banks’ activity on growth. This new approach is then applied to analyse the relationship between the banking system and economic growth in the Italian regions, through a dynamic panel technique. The empirical results show the existence of an independent effect exerted by the efficiency of banks on regional growth. [ABSTRACT FROM AUTHOR]