Italian banks efficiency and local market conditions

What is it about?

This paper evaluates the impact of local market conditions on small mutual-cooperative banks’ (BCCs) efficiency over the period 2006–2011. Results show that BCCs have performed better than other banks in the present crisis, although efficiency has decreased over time. Furthermore, BCC efficiency increases with market concentration and demand density and decreases as the number of bank branches in local markets increases. Finally,local development negatively affects (only) cost efficiency, whileBCCs generate more profit when systemic credit risk increases.

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