The banking system of the Italian Mezzogiorno is living a difficult season. The major banks were absorbed by banks external to the area, while many small local banks are still operating in marginal market niches. Starting from this point, the paper deals with the problem of the geographical articulation of the banking system, and of the role of the local banks. The main conclu-sion is that local banks are indispensable for a regional banking system to be able to favour the regional economic development. However, local banks cannot remain isolated relying on informative advantages only, but they must become part of networks with both local and national banks. Finally, the paper analyses the structure and performance of Campania's regional banking system.

JEL Codes: G21