CREDIT, VENTURE CAPITAL AND REGIONAL ECONOMIC GROWTH

In this paper we investigate the relationship between finance and regional economic growth. The dataset consists of a panel of 53 regions belonging to three countries, Germany, Italy and Spain, for the period 1995-2008. To avoid a problem of endogeneity, we estimate a dynamic panel using the generalised method of moments (GMM). The results underline the important role played by bank lending in regional economic growth. The distinction between mutual and commercial credit suggests that both types of bank are important for regional growth but the role of mutual banks is greater in economically deprived areas [EDAs]. Similar results are obtained for the venture capital variable