CREDIT AVAILABILITY AND REGIONAL-DEVELOPMENT

Many economists think financial factors play no role in regional devel opment since it is usually assumed that money can only affect the gene ral level of prices but not the real output, that is, money is neutral to the economic process. According to this traditional view, the bank ing system is neutral to regional development since it simply allocate s scarce financial resources among regions; although it is sometimes a cknowledged that it might not be neutral when due to market failure so me regional credit markets are isolated. This article argues that bank s are never neutral from a regional point of view, since they do not s imply intermediate between savers and borrowers, but they also provide credit to let investment and output grow. In particular it is suggest ed that banks may influence regional development by producing a region al pattern of credit availability that is likely to be spatially unbal anced.