The Regional Financial System: Institutional Varieties and Complementarity (1861-1914)

As largely accepted, efficient financial systems generally provide an essential boost to economic growth, independently of their specific configuration. Such a feature may explain noticeable and persistent differentials in the relative ability to develop at the regional scale when uneven degrees of efficiency characterise local sub-systems. In fact, regional financial or banking systems are basically related to macroeconomic processes of divergence or convergence, according to their relative ability to pool funds and promote access to credit, match savers and borrowers, evaluate and select investment projects, monitor and enforce contracts. The Italian case may robustly confirm such tendencies in its long-run trajectories. Besides, as major national cases imply, regional credit sub-systems tend to persist even when national financial apparatuses reach a fairly high degree of integration, in a way levelling the whole playing field across the nation. Enduring differences within national financial systems can be generally observed in the range of institutions, specialisation of intermediaries, business models, mix of public and private actors or, more simply, interest rates, that is the cost of borrowing extra resources for entrepreneurs and firms to ease liquidity constraints. These differences are mainly related to morphology or prices, determining varying degrees of allocative efficiency, on the supply side, and access to credit, on the demand side, with an impact on economic growth rates. Usually, this kind of variety within national financial systems is a characteristic that depends, on the one hand, on genetic and institutional paths and, on the other, on the economic structure and growth levels. In some cases of external political control, such as in Lombardy prior to Unification in 1861, bankers were severely limited in their experimentation with emerging forms of banking activities and business models, and typically with the shaping of the overall financial and monetary architecture. The rationale of varieties of finance across the Peninsula was thus, in some ways, a result of varieties of political independence or external power, notably affecting learning processes, operational preferences, and competencies across the board.