Abstract

In this paper we analyze the Italian Banking System evolution since the end of XIX century and the role that banks played for the development of the Southern Italy. We show that in the past, especially between the early Fifties and the early Seventies the southern banking system structure and the development policies were strictly integrated and favored a significant gap reduction between the «Mezzogiorno» and the rest of Italy. In the following years, between the middle of seventies and the early Nineties the decreasing effort to promote an effective development policy affected negatively the southern economic system and weakened the regional banks operating mainly in that area. The Italian banking system underwent a deep reorganization during the Nineties, but its restructuring process had negative implications on the financing of productive activities in the weakest areas of the country. We present some evidence of persistent problems in credit allocation and some incoherent aspects of structure of the Italian banking system. Specifically we provide evidence of a sort of mismatch between the demand of credit by Italian small firms and the supply function of reformed Italian banks.