IDEAS home Printed from https://ideas.repec.org/p/img/manwps/11.html
   My bibliography  Save this paper

Institutional Conformity and Regional Credit Market Failures: Evidence from the Italian Industrial Districts

Author

Listed:
  • Luca Andriani

    (Department of Management, Birkbeck College University of London)

Abstract

Institutional conformity might help explain regional credit market failures in Italy in terms of insolvency rate. A credit relation is subject to a certain degree of uncertainty about the credible commitment of the parties to fulfil the contractual obligations. We argue that conformity to informal institutions of reciprocal cooperation and trust can reduce this degree of uncertainty and, hence, contract breaches. We support our argument by conducting an empirical investigation where the regional density of industrial districts is used as indicator of institutional conformity. We find lower insolvency rate in regions with higher institutional conformity. Additionally, we find higher conformity to informal institutions in regions where the punishment system reacts quicker to non-compliant behaviours, suggesting a complementary relationship between conformity to informal institutions and lower cost of punishment. One of the advantages of this indicator consists in the possibility of addressing “Ostrom-type” policy recommendations to reduce regional credit market failures.

Suggested Citation

  • Luca Andriani, 2015. "Institutional Conformity and Regional Credit Market Failures: Evidence from the Italian Industrial Districts," Management Working Papers 11, Birkbeck Department of Management, revised Nov 2015.
    • Handle: RePEc:img:manwps:11
    as

    Download full text from publisher

    File URL: https://eprints.bbk.ac.uk/24000/1/24000.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Luigi Guiso & Tullio Jappelli, 2005. "Awareness and Stock Market Participation," Review of Finance, European Finance Association, vol. 9(4), pages 537-567.
    2. Ottati, Gabi Dei, 1994. "Trust, Interlinking Transactions and Credit in the Industrial District," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 18(6), pages 529-546, December.
    3. Oliver Hart & John Moore, 1998. "Default and Renegotiation: A Dynamic Model of Debt," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 1-41.
    4. G. Hodgson, 2007. "What Are Institutions?," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 8.
    5. Bernard Ganne & Yveline Lecler, 2009. "Asian Industrial Clusters : Global Competitiveness and New Policy Initiatives," Post-Print halshs-00356224, HAL.
    6. Sheila Dow & Carlos Rodriguez-Fuentes, 1997. "Regional Finance: A Survey," Regional Studies, Taylor & Francis Journals, vol. 31(9), pages 903-920.
    7. Mariarosaria Agostino & Francesco Trivieri, 2008. "Banking Competition and SMEs Bank Financing. Evidence from the Italian Provinces," Journal of Industry, Competition and Trade, Springer, vol. 8(1), pages 33-53, March.
    8. Claude Menard & Mary M. Shirley (ed.), 2005. "Handbook of New Institutional Economics," Springer Books, Springer, number 978-0-387-25092-2, June.
    9. Francesca Gagliardi, 2009. "Banking Market Structure, Creation And Activity Of Firms: Early Evidence For Cooperatives In The Italian Case," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(4), pages 605-640, December.
    10. David Dequech, 2003. "Conventional and unconventional behavior under uncertainty," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(1), pages 145-168.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuseppe Arcuri & Nadine Levratto, 2017. "New firms’ bankruptcy: does local banking market matter?," Working Papers hal-04141638, HAL.
    2. Giuseppe Arcuri & Nadine Levratto, 2020. "Early stage SME bankruptcy: does the local banking market matter?," Small Business Economics, Springer, vol. 54(2), pages 421-436, February.
    3. Giuseppe Arcuri & Nadine Levratto, 2017. "New firms’ bankruptcy: does local banking market matter?," EconomiX Working Papers 2017-31, University of Paris Nanterre, EconomiX.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Orihuela, José Carlos & Mendieta, Arturo & Pérez, Carlos & Ramírez, Tania, 2021. "From paper institutions to bureaucratic autonomy: Institutional change as a resource curse remedy," World Development, Elsevier, vol. 143(C).
    2. Dimitrios Zikos, 2020. "Revisiting the Role of Institutions in Transformative Contexts: Institutional Change and Conflicts," Sustainability, MDPI, vol. 12(21), pages 1-20, October.
    3. Huang Flora & Yeung Horace, 2018. "Law–Finance–Growth Nexus in the Context of Africa," The Law and Development Review, De Gruyter, vol. 11(2), pages 513-555, December.
    4. Masahiko Aoki, 2013. "Endogenizing institutions and institutional changes," Chapters, in: Comparative Institutional Analysis, chapter 16, pages 267-297, Edward Elgar Publishing.
    5. Nate Kauffman & Kristina Hill, 2021. "Climate Change, Adaptation Planning and Institutional Integration: A Literature Review and Framework," Sustainability, MDPI, vol. 13(19), pages 1-28, September.
    6. Martins Iyoboyi & Ummu Ahmad Jalingo & Ahmad Tsauni, 2016. "Impact of Institutions on Macroeconomic Performance in Nigeria: 1980-2013," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 2(3), pages 193-221.
    7. Dequech, David, 2009. "Institutions, social norms, and decision-theoretic norms," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 70-78, October.
    8. Araniyar C. Isukul & John J. Chizea, 2015. "Environmental Factors Influencing Corporate Governance," SAGE Open, , vol. 5(2), pages 21582440155, May.
    9. Zheng, Liang & Zhao, Zhong, 2017. "What drives spatial clusters of entrepreneurship in China? Evidence from economic census data," China Economic Review, Elsevier, vol. 46(C), pages 229-248.
    10. Fidrmuc, Jana P. & Jacob, Marcus, 2010. "Culture, agency costs, and dividends," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 321-339, September.
    11. Ardanaz, Martín & Leiras, Marcelo & Tommasi, Mariano, 2012. "The Politics of Federalism in Argentina: Implications for Governance and Accountability," IDB Publications (Working Papers) 3977, Inter-American Development Bank.
    12. Tiantian Gu & Anand Venkateswaran, 2018. "Firm-supplier relations and managerial compensation," Review of Quantitative Finance and Accounting, Springer, vol. 51(3), pages 621-649, October.
    13. Nastasi, Federico & Spagano, Salvatore, 2023. "Institutionalist Clues in Celso Furtado’s Economic Thought," MPRA Paper 120242, University Library of Munich, Germany.
    14. Dean V. Williamson, 2010. "Financial-Market Contracting," Chapters, in: Peter G. Klein & Michael E. Sykuta (ed.), The Elgar Companion to Transaction Cost Economics, chapter 24, Edward Elgar Publishing.
    15. Dorothea Alewell & Sven Hauff & Katrin Weiland & Kirsten Thommes, 2011. "HRM and the use of personnel services: an empirical analysis of German firms," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(4), pages 394-409, July.
    16. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    17. Robert Roßner & Dimitrios Zikos, 2018. "The Role of Homogeneity and Heterogeneity Among Resource Users on Water Governance: Lessons Learnt from an Economic Field Experiment on Irrigation in Uzbekistan," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-30, July.
    18. Paskalev, Zdravko & Yildirim, Huseyin, 2017. "A theory of outsourced fundraising: Why dollars turn into “Pennies for Charity”," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 1-18.
    19. Aerni, Philipp, 2012. "Applying New Growth Theory To International Trade," Papers 415, World Trade Institute.
    20. Maciejczak, Mariusz, 2015. "Will the institution of coexistence be re-defined by TTIP?," GMCC-15: Seventh GMCC, November 17-20, 2015, Amsterdam, the Netherlands 211478, International Conference on Coexistence between Genetically Modified (GM) and non-GM based Agricultural Supply Chains (GMCC).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:img:manwps:11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Luca Andriani (email available below). General contact details of provider: https://edirc.repec.org/data/dmbbkuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.