Banking Without Branches

Niklas Amberg and Bo Becker

No 430, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: The decline in cash use and growing use of digital distribution for retail banking leads to a reduced need for bank branches. Lending to small and medium sized firms (SMEs) has not benefited as much from a digital transformation, and widespread branch closures may reduce their supply of credit. Using the closing of two thirds of Swedish branches as a laboratory, we document that corporate lending declines rapidly following branch closures, mainly via reduced lending to small and young firms. The reduced credit supply has real effects: local firms experience a decline in employment and sales and an increase in exit risk after branch closures. Our results thus suggest that the disappearance of bank branches have far-reaching implications for the economy

Keywords: Banks; branch closures; credit supply (search for similar items in EconPapers)
JEL-codes: D22 G21 G32 R12 R32 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2024-02-01
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:rbnkwp:0430

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