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Title: The Importance of Brick-and-Mortar Bank Office for Lending? Evidence from Small Business and Home Mortgage Lending, 1999-2015

Citation Type: Miscellaneous

Publication Year: 2017

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Abstract: This paper studies the effect of bank branch closures on local lending in the Digital Ages. I use the mergers between big banks as an exogenous shock to create a quasi-random experiment. Combining the difference-in-differences and the instrumental variable methods, I find that the closure of each physical branch causes a 20% decrease in the total number and the volume of small business lending, even in the areas with sufficient alternative local branches. It indicates that relationship lending plays an important role in small business loaning due to the informational asymmetries in assessing the creditworthiness of local small firms and the difficulties in translating the soft information into hard information.

Url: https://lerner.udel.edu/wp-content/uploads/yichenjobmarketpaper.pdf

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Authors: Xu, Yichen

Publisher: University of Delaware

Data Collections: IPUMS NHGIS

Topics: Labor Force and Occupational Structure, Other

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