Economic proximity and cooperative banks strategies

• Introduces economic proximity as a new concept in cooperative banking strategies • Explores credit allocation trends in Italian Cooperative Banks (2010–2022) • Distances and panel regressions compare CBs and other banks’ credit allocation • Identifies strategic factors influencing lending beyond geographical proximity • Highlights local identity and broader financial system integration interplay Economic proximity measures the Italian Cooperative Banks’ (CBs) new heavier attention to finance firms operating in industries considered as interesting targets, not only because of their territorial closeness, but for tighter strategical and business reasons as an organisational response to the institutional complexity deriving from the creation of Cooperative Banking Groups. All the Italian CBs data in 2010-2022 are considered. The results show the economic proximity ability to capture the similarity between the CBs’ and the Italian banking system’s behaviour and indicate a change in CBs credit allocation policies driven by credit risk, bank size, profitability, and group affiliation.