When it comes to savings among Italian households there is no “cultural” difference between the country’s north and south, figures for the pre-crisis period (1989-2007)  show us. Even more suprising is the fact that the southern region of Campania, whose capital is Naples, has seen the highest rate of growth in the number of bank branches. If we interpreted this data solely on the basis of standard economic theory, we should expect a substantial homogeneity in the other financial parameters, but it is not so.
Standard theory tells us saving is the basis of investment, but in the journey that brings wealth there are many variables that are not always controllable, linked to the “macro-economic stability” . When the economy is stable, there is a good deal of certainty in terms of timescales in which to plan investment projects as well as access to finance at affordable rates. On the other hand, where the context is uncertain uncontrollable socio-economic factors mean that investment becomes a gamble.
This appears to be the case in the South, where despite comparable saving rates there are nearly twice as many bad loans as many regions of the north-central . Crime, the size of the informal sector and pervasive corruption at all levels act as elements that can create a distortion of the cash flows. Therefore, it is more difficult to ‘convert’ savings into an investment, at least locally.
In the 8 or so years until the great financial crisis of 2008 Italy enacted a series of “reforms” that led to a concentration in the country’s banking sector. Without getting into specifics, an unleashing of competition led to the merger of banking groups, through mergers and acquisitions and cross-shareholdings. State-led industrial development of the South has also been all but stopped, both in terms of direct investment and through the Cassa per il Mezzogiorno, a regional development agency. Cuts to public funds and structural problems in the real economy have been transmitted to the financial sector, leading to the disappearance of a autonomous financial system in the South .
We were led to believe that the reorganization of the banking sector, under the pressure of European regulations, would lead to an improvement in the efficiency of credit allocation, but when you analyze the uneven territorial reality, it can lead to a disappointing territorial selection in the distribution of credit. This is what seems to have happened. The banks have merged, the decision-makers have moved almost entirely to the Centre and North of the country and bank branches spread across the territory of the South remain almost exclusively dedicated to harvesting deposits. Credit is provided to the South, but under much more punishing conditions than in the Centre-North. All this means that in the South higher risk investments are promoted, and these in turn have a lower success rate.
This further fuels the vicious cycle that exacerbates the gap between North and South. With an end to public intervention, government spending is cut and this is significant in explaining regional disparities. We have seen no convergence in terms of growth and the price of improvements to the banking sector have been paid by a further credit crunch to residents in the South.
No action has been taken to tackle the structural conditions of the gap: the inadequacy of the production system, the lack of hard and soft infrastructure, crime, corruption. So those who persist in doing business pay a double penalty, because they pay taxes in line with the national average but when they turn to the credit market they get a response that discriminate geographically. It is against this background that European funds have shown limited effectiveness, though with notable exceptions .
The financial sector reflects the reality of the North-South divide, and the resulting risk gap is reflected in credit terms. And if the decision-making centres are located elsewhere it is even more difficult to secure a push to invest in uncertain and risky ventures. The causes of the North-South divide are real and the financial sector reacts to them: any policy response should start from this awareness.
 For further information see Gli effetti delle trasformazioni del sistema bancario sulla crescita economica delle regioni italiane”, pubblicato dalla published by Rivista economica del Mezzogiorno (n.1-2 del 2014).
 See the paper by Peter L. Rousseau and Paul Wachtel, “Inflation thresholds and the finance-growth nexus” published by the Journal of International Money and Finance (no. 21.6 in 2002).
 In this regard, refer to the online data of the Bank of Italy.