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Credit constraints vs lack of demand. An analysis of Italian firms' borrowing demand in the construction industry

Author

Listed:
  • Audrey Desbonnet

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Marisa Ratto

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Mariana Rojas-Breu

    (Université Paris-Panthéon-Assas)

Abstract

This paper seeks to better understand the factors influencing credit demand among Italian firms in the construction industry. Using data from the Bank of Italy's survey on construction firms for the period 2018-2022, we find that the majority of firms express no intention of applying for a loan. Two possible explanations for this limited engagement with the banking system are credit rationing by financial institutions and renewals of already existing credit lines. Additionally, we consider the possibility that firms may access credit through alternative means, including the illegal sector via mafia infiltration. Our analysis examines whether the lack of credit demand stems more from limited supply by financial intermediaries or from firms' disinterest in seeking formal loans. To explore this further, we combine the Bank of Italy survey data with records of property confiscations linked to mafia activity in the same province where firms are located. The findings suggest a positive correlation between mafia control of the territory and reduced demand for loans in the formal credit market.

Suggested Citation

  • Audrey Desbonnet & Marisa Ratto & Mariana Rojas-Breu, 2025. "Credit constraints vs lack of demand. An analysis of Italian firms' borrowing demand in the construction industry," Working Papers hal-04970443, HAL.
    • Handle: RePEc:hal:wpaper:hal-04970443
    Note: View the original document on HAL open archive server: https://hal.science/hal-04970443v3
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