WebJun 18, 2024 · Analyzing loan rates and firms’ decision to switch lenders provides further evidence for banks’ strategic use of private information. However, distance erodes our lender’s ability to collect ... Webcontract information from more than 15,000 bank loans to small firms comprising the entire loan portfolio of a large Belgian bank. We report the first comprehensive evidence on the occurrence of spatial price discrimination in bank lending. Loan rates decrease with the distance between the firm and the lending bank and increase with
The Causal Impact of Distance on Bank Lending - INFORMS
WebDistance and Private Information in Lending. Review of Financial Studies, 2010, vol. 23, issue 7, 2757-2788. Abstract: We study the effects of physical distance on the acquisition and use of private information in informationally opaque credit markets. Using a unique data set of all loan applications by small firms to a large bank, we show that ... WebDec 1, 2024 · Besides the standard and hard financial information commonly used by banks, such as the borrower's income and credit report, lenders can view nonstandard, unverifiable and less quantifiable information, such as the maximum interest rate the borrower is willing to pay, a textual description of purpose of borrowing, and the … lama rah el sabr
Distance and Private Information in Lending
Webcontract information from more than 15,000 bank loans to small firms comprising the entire loan portfolio of a large Belgian bank. We report the first comprehensive evidence on the occurrence of spatial price discrimination in bank lending. Loan rates decrease with the distance between the firm and the lending bank and increase with Webfinding is consistent with the notion that banks mistrust their private information as distance increases and further points to its local nature. Our main contribution … WebUsing billions of observations on the locations of bank branches and firms in China, we measure lender-borrower distance by geographic information system (GIS) and find a … jera sns