This paper describes the territorial gaps in firms' access to bank credit between 2008 and 2019 and assesses to what extent they reflect firms' observable characteristics. The paper also analyses the dynamics of loans to firms, highlighting which categories of banks have most supported the financing of firms in the southern regions and the consequences in terms of their credit quality and profitability.
The estimates provided in the paper show that, other things being equal, Italy's southern firms share a similar probability of accessing bank credit with those from other regions. However, southern firms face worse credit conditions in a more adverse socio-economic context. In the period considered, bank lending to southern firms was stable, while it tightened in the Centre and North: the tightening of credit by the five largest banking groups was offset by other banks, especially cooperative ones. Southern banks are characterized by lower asset quality and profitability.
