In Italy, Cooperative Credit Banks (CCBs), unlike large banks, despite the economic downturn, have continued to extend credit to customers, but at the cost of a higher incidence of bad credit. This increased credit risk of local banks has been caused by management policy choices, such as preferring to modify the conditions applicable to credit supply and to engage firms in long-term credit relationships rather than initiating credit recovery procedures. The originality of this empirical analysis lies in its demonstration of the effects of environmental factors related to the spread of crime and lower economic well-being, higher unemployment and poverty in families on the credit market in Southern Italy. This correlation between the riskiness of credit for CCBs and socioeconomic variables has also been reported through the analysis of territorial differences between geographical areas. This analysis highlights a broader diffusion in this macro-region than in the North and Centre. Finally, an OLS approach with panel corrected standard error is provided for modelling the credit risk as a function of environmental factors
