Communication within Banking Organizations and Small Business Lending

Ross Levine (), Chen Lin, Qilin Peng and Wensi Xie

No 25872, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate how communication within banks affects small business lending. Using travel time between a bank’s headquarters and its branches to proxy for the costs of communicating soft information, we exploit shocks to these travel times to evaluate the impact of within bank communication costs on small business loans. Consistent with Stein’s (2002) model of the transmission of soft information across a bank’s hierarchies, we find that reducing headquarters-branch travel time boosts small business lending in the branch’s county. Several extensions suggest that new airline routes facilitate the transmission of soft information, boosting small firm lending.

JEL-codes: D83 G21 G30 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-ban and nep-ent
Note: CF IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Ross Levine & Chen Lin & Qilin Peng & Wensi Xie, 2020. "Communication within Banking Organizations and Small Business Lending," The Review of Financial Studies, vol 33(12), pages 5750-5783.

Downloads: (external link)
http://www.nber.org/papers/w25872.pdf (application/pdf)

Related works:
Journal Article: Communication within Banking Organizations and Small Business Lending (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:25872

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w25872

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().