Cooperative banks, innovative entrepreneurship, and trust: insights from Italian history

We investigate the role of the historical presence of cooperative banks on current levels of new business formation in innovative industries. Empirical evidence shows that the regional tradition of entrepreneurship tends to be persistent. In Italy, current provincial rates of entrepreneurship in high technology sectors still depend significantly on the propensity of entrepreneurs to use new technologies in 1927 (Cosci et al.2022). How important was it in the past that these innovative entrepreneurs found banks that were able to finance their investment projects? In 1950, in a country destroyed by WWII, Italian monetary authorities assigned a strategic role to small banks to promote local economic development. Our findings suggest that the diffusion of small banks in the first four decades of the post-war period fostered the development of an innovative entrepreneurial culture in Italian provinces, but only in the area characterised by relatively higher levels of trust.