Competition and Stability in the Credit Industry : Banking vs. Factoring Industries

In the last decade, most credit-industries registered a decline in lending volumes, with the exception of the factoring industries that instead registered a substantial increase. Surprisingly, only a handful of papers so far investigate factoring companies. Do factoring firms display the same stability levels of banks? Is the competition similar in factoring and banking industries? Is the link between competition and stability the same in these industries? Focusing on Italy (one of the largest factoring and banking market in Europe) and using a unique dataset, we show three main results; factoring companies are (on average) more stable than banks; 2) the stability of factoring companies increase when competition declines (competition fragility-view); 3) the competition-fragility view is weaker in the factoring industry than in the banking sector