Credit constraints in Italian industrial districts

Abstract

Italy is characterized by strong differences both in the productive and in the financial structure. Small and medium firms tend to concentrate in the so called ‘Marshallian industrial district’, whose productive system has been thoroughly studied but whose financial features are partially overlooked. This paper aims at investigating how the location of a firm in an industrial district affects its ability to resort to external finance, mostly bank loans. The econometric analysis on a panel of 1700 firms over the 1989–1995 period shows that firms located inside industrial districts have an advantage in terms of financial relations with the banking system: both the cost of credit and the probability to face financial constraints are lower. Nevertheless, the cyclical pattern of this advantage is not in favour of district firms: following the tightening of monetary policy, increases in interest rates on bank loans are proportionally higher for firms inside the district; furthermore, also the advantage consisting in an easier access to credit market disappears after the 1992–1993 recession.

Incorporating demand-side aspects into regional policy: variations in the importance of private investment decision factors across regions

“…They can also change collateral requirements, tax treatment, etc. These points are investigated by Russo and Rossi (2001) in the Italian case, Shen and Wang (2005), in American branches operating in Taiwan, and Colombo (2001), in dealing with the Hungarian firms under the influence of remaining planned economy rules.…”

“…Shen and Wang (2005) stress that, unlike in the US, American subsidiaries in Taiwan are allowed to buy stocks of the parent company-an option that impacts investment decisions. Russo and Rossi (2001) indicate that small and medium Italian firms located within the Marshallian industrial districts have better access to external financing than similar firms in other contexts. Ghura and Goodwin (2000) study the determinants of private investments in Asia, Sub-Saharan Africa and Latin America, and conclude that "the results for the full sample of countries are by no means common across the regions", especially the capacity of public investment to stimulate private investment and the role of increases in private sector credit.…”

Management of a cluster as a network for cooperation between SMEs in Poland

“…The most important ones include: ensuring access to new technologies; the increase in the productivity of SMEs; supporting innovativeness; creating new workplaces; reducing the costs of operations by means of running joint activities relating to promotions, sales and supplies of raw materials; increasing the quality of human capital; and cooperation with scientific institutions and research & development centres. Firms operating within the framework of clusters achieve financial benefits through lower costs of credit and better financial relations with banks, while also being less restricted by credit loans than firms located outside of a cluster (Russo & Rossi, 2001). …”

Do Inter-firm Networks Make Access to Finance Easier? Issues and Empirical Evidence

“…Diversely, Sorenson and Stuart (2001) Empirical investigations on the issue are not conclusive. On one side, Russo and Rossi (2001) find that ID firms have both a lower cost of credit and a smaller probability of facing financial constraints. In the same vein, Rotondi (2005) and Ughetto (2007) show that firms located in IDs have easier access to external finance, even if this result is not robust when the analysis focuses on firms engaged in significant R&D activities.…”