We thank an anonymous referee, Riccardo De Bonis, Marco Malgarini, Raoul Minetti, Steven Ongena, and participants at the MoFiR workshop on banking (Ancona, 2012), at the Post-Crisis Banking Conference (Amsterdam, 2012), and at seminars held at the Università di Milano Bicocca and Università Politecnica delle Marche for valuable suggestions.
The Home Bias and the Credit Crunch: A Regional Perspective
Article first published online: 27 JAN 2014
© 2014 The Ohio State University
Journal of Money, Credit and Banking
Volume 46, Issue s1, pages 53–85, February 2014
How to Cite
PRESBITERO, A. F., UDELL, G. F. and ZAZZARO, A. (2014), The Home Bias and the Credit Crunch: A Regional Perspective. Journal of Money, Credit and Banking, 46: 53–85. doi: 10.1111/jmcb.12078
- Issue published online: 27 JAN 2014
- Article first published online: 27 JAN 2014
- Manuscript Accepted: 4 JAN 2013
- Manuscript Received: 24 FEB 2012
- credit crunch;
- home bias;
- flight to quality
Using detailed data on loan applications and decisions for a large sample of manufacturing firms in Italy during the recent financial crisis, we find that the credit crunch has been harsher in provinces with a large share of branches owned by distantly managed banks. Inconsistent with a flight to quality we do not find evidence that economically weaker firms suffered more during the crisis. In contrast, we find that financially healthier firms were affected more in functionally distant credit markets than in markets populated by less distant banks, consistent with a home bias on the part of nationwide banks.