Access to credit and economic complexity: Evidence from Italian provinces

This paper focuses on the relationship between “urbanization economies” and access to bank credit by assessing the role of product variety and economic complexity in affecting local credit market conditions. Using quarterly data on Italian provinces for 2008–2018 and adopting a dynamic (spatial) econometric approach, the work provides robust evidence highlighting how local economic complexity reduces the barriers to accessing local credit markets. With a greater “qualified” diversification (higher economic complexity), banks access successful projects with greater probability and are more willing to grant credit. The estimation results also reveal the existence of long-run spatial spillover effects. The empirical findings advocate for a nuanced and context-specific policy framework. By embracing place-based and mission-oriented policies encouraging diversification and knowledge diffusion, regions can enhance their economic resilience and provide tailored support to businesses, ensuring their stability and growth even in the face of challenging credit conditions.