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Abstract:  This paper presents the first econometric analysis of the role played by Italian banks of issue in shaping a national credit system between 1861 and 1913. Drawing on a new and extensive dataset covering their provincial operations as well as data on non-issuing bank local activity, we find that local credit markets in Italy benefited significantly from the activities of issuing banks, notably Bank of Italy. These results are robust and stem from the positive effects on commercial joint stock banks (SOCs). In contrast, savings and cooperative banks were less affected by the activities of the issuing banks. Although all three issuing banks active in the South (Bank of Italy, Banco di Napoli, Banco di Sicilia) contributed to overall credit expansion, southern SOCs particularly benefited from the local operations of the Bank of Italy. Finally, we observe a preference among southern SOCs for reinvesting the additional liquidity obtained through rediscounting with the issuing banks into government bonds rather than commercial credit. Our findings confirm the early emergence of a “financial” North–South divide.

The Oxford Seminar in Economic and Social History series for Hilary Term 2026 is convened by Stephen Broadberry and Victoria Gierok. 

For more information on this or any of the seminars in the series, please contact stephen.broadberry@nuffield.ox.ac.uk.