Fluctuations in banks' due diligence are increasingly viewed as a force driving the buildup and unfolding of crises. In a dynamic general equilibrium model, we show that banksí access to retail and wholesale liquidity and the values of loan portfolios govern banks' incentives and effectiveness...

Using rich data from the Italian local credit markets (provinces), this paper investigates the impact of local banking development on income inequality and the role of the socioeconomic structure in this link. Exploiting the Italian historical banking regulation to instrument for the local...