Small Business Lending and the Bank-Branch Network

Petkov, Ivan (2015): Small Business Lending and the Bank-Branch Network.

Abstract

I tests whether the market for small business lending is integrated by examining the exposure of different credit markets to localized economic shocks when they host the same bank network. In a unified approach I quantify the effect of a positive and a negative credit-supply on local activity. I show that the market for business loans provided by smaller banks is locally segmented. Businesses in areas with increased credit were not able to expand earlier with funds from other banks and were forced to wait for funding from their local banker. Businesses in areas with reduced credit were forced to lower their activity unable to substitute funding lost to more profitable projects elsewhere.

• Item Type: MPRA Paper
• Language: English
• Keywords: Small Business Lending, Market Segmentation, Bank-branch Network, Lending Channel, Energy Boom, Real Estate Boom
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity

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