The Geography of Banking Power: The Role of Functional Distance

  • Pietro Alessandrini
  • Manuela Croci
  • Alberto Zazzaro


In this chapter 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 the banking 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 operational distance, but also to the distance between decision centres of banks and local systems, that we define as functional distance. The focus of the chapter 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.


Small Firm Market Power Bank Performance Operational Distance Local Bank 
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This study is part of the interuniversity research project “Integration problems of the Italian banking system: area distribution, specialisation and competitiveness within an interregional and European framework”, coordinated by Pietro Alessandrini, cofunded by the Ministry for Higher Education and Research (MIUR). We wish to thank Giorgio Calcagnini, Pierluigi Ciocca, Michele Fratianni, Riccardo Lucchetti, Marcello Messori, Giangiacomo Nardozzi, Alberto Niccoli, Luca Papi, Domenico Scalera for discussions on the research topics and suggestions. We are also grateful to participants at the annual conferences of the American Association of American Geographers, Denver, 2005. Finally, we thank Luca Brandi for his assistance in collecting and processing data. As usual, the authors are entirely responsible for any errors.


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Copyright information

© Springer Physica-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  • Pietro Alessandrini
    • 1
  • Manuela Croci
    • 2
  • Alberto Zazzaro
    • 1
  1. 1.Department of Economics, Money and Finance Research GroupUniversità Politecnica delle MarcheAnconaItaly
  2. 2.Lloyds TSBLondonUK

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