Multilevel empirics for small banks in local markets

What is it about?

Small banks are embedded in narrow markets and hence benefit from proximity to their customers. By referring to multilevel approach, this paper evaluates how much the performance of Italian mutual co-operative banks is determined by geographical and individual characteristics. The effect of local markets explains 28.27 per cent of bank heterogeneity in the empty multilevel model and 33 per cent in the most extended model.

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