Net Interest Margin Dynamics, Policy Interventions, and Social Outcomes: Evidence from the Italian Regional Divide

The article analyses the evolution of the Net Interest Margin (NIM) in the Italian banking system between 2013 and 2025, examining the transition from negative rates to the ECB’s recent tightening cycle and the subsequent normalisation phase. Using econometric analysis of a sample of over 400 intermediaries, the study investigates how monetary policy transmission is influenced by institutional heterogeneity and the persistent North–South territorial dualism. The results highlight an asymmetric pass-through mechanism: in the South, structurally higher NIMs reflect less competitive pressure and greater stickiness of deposit rates, manifesting as a “social cost” that slows regional convergence. In contrast, cooperative credit banks (CCBs) emerge as crucial actors for financial inclusion, mitigating local inequalities through relationship lending models. This study links the stability of margins to collective well-being outcomes, integrating insights from the best doctrine on the nexus among economic uncertainty, public health, and demographic dynamics. Evidence suggests the need for “spatially aware” policy interventions to ensure that bank profitability contributes to sustainable and equitable social development, especially in the context of PNRR implementation.