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- Title
Do spatial dependence and market power matter in the diversification of cooperative banks?
- Authors
Algeri, Carmelo; Forgione, Antonio F.; Migliardo, Carlo
- Abstract
This study examines the determinants of cooperative banks' diversification proclivity, with consideration of the spatial dependence effect. The empirical analysis demonstrates that Italian cooperative banks operate as a network with significant spillover effects that should not be ignored. Indeed, local banks compete in the same market segment, and any shift in their diversification strategy has a cascading effect on neighbouring cooperative banks as a result of customer migration. Finally, we observe that an increase in bank market power results in a decline in local bank lending activity.
- Subjects
COOPERATIVE banking industry; BANK loans; COMMUNITY banks; BANK customers; MARKET power; BANK marketing; PORTFOLIO diversification
- Publication
Economic Notes, 2022, Vol 51, Issue 3, p1
- ISSN
0391-5026
- Publication type
Article
- DOI
10.1111/ecno.12204