Credit Supply and Bank Interest Rates in the Italian Regions

This work offers a synthesis of the characteristics of the demand and supply of credit at the regional level in Italy. The various analyses are conducted using data from the Bank of Italy, ISTAT (the Italian National Institute of Statistics) and Prometeia, and cover the 2010-2014 period. In particular, the loan supply for northern regions seems more proportionate, and readily responsive to household and firm needs. The interdependence between the dynamics of price formation and credit quality, captured by a vector auto-regression for panel regressions, is also significant, with an intensity that varies according to loan maturity and the evolution of economic and financial variables. This result highlights an amplified, negative relationship between interest spreads and credit quality.