Measuring the Efficiency of the Banking System in a Dualistic Economy: Evidence from the Italian Case



The paper provides an analysis of some features of the Italian banking system during the decade 1993–2003. In particular, it focuses on the efficiency of Italian banks – in terms of parametric cost and profit functions – taking into account the dualistic structure which characterizes the Italian economy, the bank size and the juridical form. During this period the Italian banking system has experienced a higher level of competition and significant ownership changes; these phenomena had a relevant impact on the performance of all banks. In particular, we found a reduction of differences in the efficiency between Northern and Southern banks. In addition, small banks exhibit a higher level of efficiency compared with the large ones. Finally, we observe that Mutual Banks improved in a significant way their performance compared with the banks organized as limited companies and cooperative. These results confirm the ability of local small Mutual Banks to effectively and successfully compete in the markets characterized by global operators. The reason for the continuing vitality of local banks is due to the fact that they offer a different product from large global banks and attract customers, specially small local firms, which external global banks would find difficult to serve.


Risk Aversion Banking System Stochastic Frontier Large Bank Small Bank 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



 The main results of this research – partially financed by Banca Del Monte Foundation of Foggia – have been presented and discussed by the authors at the conference organised by the Economics Faculty of the Second University of Naples in May 2007 and at the International Conference on Mediterranean Studies in Athens in March 2008. Damiano Silipo and all the participants are thanked for their comments which were taken into account during the writing of this paper, obviously none of them are responsible for possible errors or inaccuracies still present. Mrs. De Magistris is highly thanked for the statistics processing


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Copyright information

© Springer Physica-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  1. 1.Dipartimento di Diritto ed EconomiaSecond University of NaplesCapuaItaly
  2. 2.Consob, Italian Stock Exchange AuthorityRomaItaly

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