The potential evolution of the supply of credit to the productive chain: A focus on Italy and the Regional Sardinian economy

The analysis performed in this chapter aims to define the dynamics of the demand for and supply of credit for the regional Sardinian economy, compared to other Italian regions, during the period from 2002 to 2013. Typical methodologies for the analysis of financial series (velocity and momentum indicators), as well as the methodologies for spatial analysis (principal component analysis, cluster analysis and specialisation indexes), have been employed for this purpose. Based on a sample of macro- and micro-data – the latter being related to 19,000 firms – our analysis highlights the existence of some high-performing industry segments, such as Lodging, Food and Food Services (LFFS). Overall, our results show undeniable criticalities with regard to the allocative efficiency of banks. For the most recent years of the sample, banks severely shrank the credit supply towards the most dynamic sectors, exhibiting instead an increasing credit specialisation towards weaker performing sectors, which are characterised by high rates of impaired loans.