The paper presents an analysis of the dynamics of bank interest rates in Italian regions, according to the characteristics of the local banking market. The empirical analysis investigates the influence that variables related to the density and concentration of the banking network, credit quality and productivity have on the regional cost of banking loans. The empirical results show, in particular, a direct relationship between non performing loans and interest rates, a higher cost of credit in presence of an increasing banks’ concentration and a reduction in interest rates in regions where there are more local banks.
Keywords: Regional economics; interest rates; bank credit.
Jel Code: R1, E43, G21