Small Business Economics

, Volume 32, Issue 4, pp 439–464 | Cite as

Financial development and the growth of cooperative firms

  • Francesca Gagliardi


The purpose of this article is to empirically assess the relationship existing between local financial development and the growth of firms, with a special focus on cooperatives. Using Italian data, a multiplicative interaction model is specified, so as to allow the impact of local banking development to differ between cooperative and non-cooperative firms. The main finding is that although local banking development represents a determinant of firms’ growth, regardless of their legal structure, it plays a special role in boosting the growth of cooperatives. This result provides evidence in favor to the existence of an institutional complementarity relationship between the development of local banking institutions and cooperative firms.


Cooperatives Financial development Institutional complementarities 

JEL Classifications

B52 G21 L25 L30 L26 



In writing this version I benefited from the comments of Geoffrey M. Hodgson, Avinash K. Dixit, Douglass C. North, Giovanni Dosi, Jesse M. Fried, Francesco Trivieri, the participants to the European School on New Institutional Economics held in Cargese on 21–25 May 2007, and two anonymous referees. I thank Attilio Pasetto from Capitalia for his kind elucidations. I am also grateful to Mariarosaria Agostino, Elena Granaglia, Rosanna Nisticò and the participants to the Centre for Research in Institutional Economics Workshop held at the University of Hertfordshire on 23–24 January 2007, for their valuable comments and suggestions on earlier versions of this article. Of course, all remaining errors and omissions are mine.


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© Springer Science+Business Media, LLC. 2007

Authors and Affiliations

  1. 1.The Business School, Department of Accounting, Finance & EconomicsUniversity of HertfordshireHatfieldUK

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