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Urbanization and firm access to credit
Author(s) -
Carmignani Amanda,
Blasio Guido,
Demma Cristina,
D'Ignazio Alessio
Publication year - 2021
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/jors.12525
Subject(s) - urbanization , collateral , real estate , business , population , exploit , bank credit , service (business) , industrial organization , finance , economics , economic growth , marketing , demography , sociology , computer security , computer science
The paper investigates whether firms have better access to bank credit in territories characterized by a larger degree of urbanization. It uses Italian bank‐firm data drawn from the Credit Register to devise an indicator of easiness of access to credit. The paper proposes an instrumental variable strategy that exploits as instruments past population density and urbanization driven by political economy considerations. The results show that urbanization positively affects access to credit for construction firms, whose collateral greatly benefits from thicker real estate markets. No impact is found for service and manufacturing firms.