Mariarosaria Agostino and Francesco Trivieri
The purpose of this paper is to investigate the relationship between bank market power and firm creation, which represents a debated issue in the economic literature, still…
Abstract
Purpose
The purpose of this paper is to investigate the relationship between bank market power and firm creation, which represents a debated issue in the economic literature, still lacking empirical evidence.
Design/methodology/approach
The analysis is carried out by taking an international perspective, using different measures of banking competition, and controlling for a large set of determinants suggested by the variegate literature on firms’ birth drivers.
Findings
The main finding suggests that credit market competition may benefit firms’ creation, as the relationship between the latter and bank market power – when statistically significant – appears to be negative. In addition, the detrimental impact of market power appears greater (in absolute terms) when departing from higher levels of banking competition.
Research limitations/implications
The empirical evidence seems supporting the competitive position in the debate on the role of banking competition. Furthermore, the authors reckon that the findings reinforce the belief of a crucial role played by the availability of funds for nascent firms, with evident implications for the policy strategies more appropriate to foster entrepreneurship. The “fashion” followed by several countries of lowering administrative entry barriers (van Stel et al., 2007) needs to be reappraised, pondering also means to enrich resources availability.
Originality/value
To the best of the knowledge, the paper is the first one addressing the issue of the role of bank market structure on firms’ creation in a multi-country setting.
Details
Keywords
Francesco Aiello, Lucia Errico and Sandro Rondinella
This paper investigates whether and to what extent operating in inner areas affects the profitability of innovative Italian small and medium-sized enterprises (SMEs) over…
Abstract
Purpose
This paper investigates whether and to what extent operating in inner areas affects the profitability of innovative Italian small and medium-sized enterprises (SMEs) over 2012–2018.
Design/methodology/approach
Guided by the National Strategy for Inner Areas and the “Investment Compact,” this study distinguishes between inner and core innovative SMEs. It employs various econometric models to estimate a regression for the return on assets of SMEs, differentiating between firms operating in inner and non-inner areas of northwest, northeast, centre and south Italy.
Findings
Findings reveal that innovative SMEs in inner areas generally exhibit lower profitability compared to those in non-inner municipalities. However, huge heterogeneity in results is observed across the country. Specifically, innovative SMEs in the inner areas of the south register lower profitability than those operating in non-inner zones. Conversely, innovative SMEs located in the inner municipalities of northwest and northeast Italy show higher profitability than their peers in non-inner areas. The results imply that targeted policies for inner areas are crucial. However, due to the diversity of local impacts, a differentiated approach, depending on the geographic context, is necessary.
Originality/value
The study aims to explore the relationship between inner areas and the performance of innovative SMEs in Italy. More precisely, it examines the effect of operating in a municipality located within an inner area on the profitability of innovative SMEs. This issue has been overlooked in existing literature. Importantly, we aim to determine whether there is a heterogeneous impact based on geographical localisation, specifically in the Northwest, the Northeast, the Centre and the South of the country. Therefore, this paper contributes to the literature by investigating the factors influencing the performance of innovative SMEs and suggesting new policy recommendations for developing inner areas in Italy.