The effects of bank branch closures on credit relationships

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Iconio Garrì: Bank of Italy

No 1254, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper studies the effects of bank branch closures on individual business borrowers, using a sample of events that occurred in Italy between 2010 and 2014. I find that a branch closing down increases the probability of a credit relationship terminating. The impact is weaker the shorter the distance from an alternative branch of the bank, the longer the duration of the relationship and the greater the bank’s share of loans to the firm. However, branch closure is not generally associated with a decrease in the total amount of credit available for the firms formerly served by the closed branch. A temporary shrinkage of loans only occurs for small borrowers and short-term credit lines.

Keywords: bank branch; closures; lending relationship; matching (search for similar items in EconPapers)
JEL-codes: D82 G21 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-ban, nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1254_19

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