Geographical aspects of recent banking crises in Italy

Abstract

Recent international financial and banking crises highlight the geographical context of the spatial propagation of shocks, particularly given that the international diversification of portfolios was a driving force of the global contagion. A different scenario is presented through the empirical evidence in this chapter, which examines the crises that affected four major local banks in Italy: Cassa di Risparmio di Ferrara, Banca delle Marche, Cassa di Risparmio della Provincia di Chieti and Banca Popolare dell’Etruria e del Lazio. Here, a high spatial concentration of activities compromises stability: the geography of branches and loans and the loss of international competitiveness for export-orientated local economies results in financial unbalances and in the need for bail-outs. A geographical analysis of these banking crises in Italy underscores the perils of low spatial diversification in banking.