Banking market structure, creation and activity of firms : Early evidence for co-operatives in the Italian case

‘The definitive version is available at www3.interscience.wiley.com '. Copyright International Centre of Research and Information on the Public, Social and Cooperative Economy (CIRIEC)This paper investigates whether local differences in banking competition impact on the creation and activity of firms, with a special focus on cooperatives. The empirical analysis, implemented on a sample of Italian firms, reveals non-monotonic effects of bank market power on firm creation and activity. In regard to the former, a bell-shaped relationship is found for both cooperative and non-cooperative firms, suggesting that a moderately concentrated banking market favors firms’ creation. A less homogeneous pattern characterizes firms’ activity: a bell-shaped parabola is still found for non-cooperative firms, while a U-shaped relationship emerges for cooperatives, showing that active coops benefit from a relatively more intense banking competition.Peer reviewe