Marcello Messori

Bank-firm relationships and allocative efficiency in Northeastern and Central Italy and in the South

Abstract We make two contributions on the extent and impact of relationship banking – based on close and long-lasting bank–firm customer relationships – in the three sub-systems in which Italy may be subdivided. First, we show that relationship banking is more extensive in both sub-systems where small businesses prevail: the fast-growing Northeast and Center (NEC) and the South, the marginal area of dependent development. Second, we demonstrate that relationship banking improves the allocation of credit in the NEC but worsens it in the South. This evidence suggests that relationship banking may be beneficial or detrimental depending on the socio-economic structure.

SINGLE PERIOD ANALYSIS: FINANCIAL MARKETS, FIRMS' FAILURES AND CLOSURE OF THE MONETARY CIRCUIT

The seminal contributions of Augusto Graziani (1982; 1984) to the monetary theory of production make it clear that the realisation of monetary gross profits of firms at the macroeconomic level represents the most intricate and awkward puzzle in the circuit approach. The analytical reason for this puzzle is simple: assuming a single macro period, isolated from those that precede and follow it, and a private pure credit economy, closed to foreign exchanges, the quantity of means of payment introduced into the economy at the beginning of the period coincides with the total debt of firms and with the wage bill; hence the total monetary revenues realised by the set of firms at the closure of the period will at most be equal to their initial debt and cannot account either for the existence of monetary profits or for the monetary payment of bank interest.1

Banche, riassetti proprietari e privatizzazioni

This paper aims to show that the inefficiencies in the working of the Italian banking system can hinder that reallocation of the property rights as well as those processes of privatization which could allow an increase in the competitiveness of the Italian economic system in the European market characterized by EMU. I begin from an assessment of the strong regulation which was typical of the Italian credit market until ten years ago. I then analyze the consequences of the partial liberalization on the property rights allocation of the Italian banks. This analysis points out that the ownership structure of the Italian banking system and its internal linkages are one of the main reasons for its inefficient working. In the last three sections of the paper, I specify this conclusion by referring to the recent concentration processes between the Italian biggest banks as well as to the changes in the organization and in the financial supply of the regional and local banks.

Equilibrium, Order and Monetary Profits: Business Failure as a Vital Macroeconomic Need

One of the oldest and most awkward conundrums of monetary theory concerns the realization and accumulation of profit in money terms for the aggregate of firms. This paper aims to show that an analysis based on a weak concept of equilibrium as ‘order’, capable of accounting for business failure as a vital macroeconomic phenomenon, can lead to the solution of this conundrum without recourse to any ad hocery.

New Institutional and New Keynesian Economics

Since the beginning of the seventies (e.g. Akerlof 1970, Williamson 1971), economic theory has been passing through a phase of deep evolution, characterised inter alia by an emphasis on market failures and by a search for sounder microfoundations for macroeconomics. Of particular significance have been the fundamental challenges to traditional general equilibrium theory emanating from “new institutional economics” and from “new Keynesian economics”. The purpose of this chapter is to describe and evaluate key elements of these two approaches.

Per la produttività programmata

L’insoddisfacente dinamica della produttivita del lavoro registrata in Italia a partire dalla seconda meta degli anni Novanta rispecchia l’incapacita del nostro paese di adattarsi al nuovo funzionamento dell’economia internazionale. Il superamento di questa difficolta richiede di affrontare il vero problema di incentivo dell’economia italiana: e possibile disegnare la contrattazione salariale in modo da rendere convenienti i costi delle innovazioni tecnologiche e organizzative a imprenditori poco propensi al cambiamento? La nostra proposta di produttivita programmata rappresenta una soluzione efficace di questo problema, condizionando le prospettive di crescita dei profitti agli effettivi incrementi di produttivita che le imprese saranno in grado di realizzare.

Banking and Finance in the Italian Mezzogiorno: Issues and Problems

In this paper I analyze the specificity of the workings of capital markets, and in particular the behavior of the banking system in the Italian Mezzogiorno. As is well known, the South is the least developed part of the Italian economy: it represents a marginal area of an industrialized economic system, and can therefore be considered an industrialized area in itself. I maintain that, beyond some negative institutional features (mainly, the heavy economic role played by illegal organizations such as the Mafia),the Mezzogiorno’s mix of marginality and industrialization represents an extreme case of the growth paths followed -or to be followed- by other areas in the European pheripheries. On the other hand, the development of finance and banking institutions and their (active or passive) role are crucial in the development of the economic systems75. Hence, my analysis aims to highlight the financial constraints which hinder the economic evolution of Southern Italy and, possibly, of other European marginal areas. To this end, I stress some of the more general and theoretical aspects.

Keynesians, New Keynesians and the Loanable Funds Theory

Two of the major tenets of ‘New Keynesian Economies’ are (i) that capital market imperfections are due to information asymmetries, and (ii) that the supply of credit is endogenous, giving rise to the possibility of credit rationing.2 Points (i)-(ii) imply that economic activity is mainly affected not by the amount of money and the related interest rate but by the quantity constraint of credit (Stiglitz 1988: 320; Greenwald and Stiglitz: 1987). However, since ‘New Keynesian Economics’ aims to build up a general macroeconomic model based on non-traditional microeconomic foundations, it must integrate its theory of credit with a theory of money. In this last respect New Keynesians occasionally refer to the ‘flow approach’ of the loanable funds theory (for instance, Blinder and Stiglitz 1983: 297).