Information Technology and Credit: Evidence from Public Guarantees

Fabrizio Core () and Filippo De Marco ()
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Fabrizio Core: Department of Business Economics, Erasmus University, 3062 PA Rotterdam, Netherlands; Erasmus Research Institute of Management (ERIM), 3062 PA Rotterdam, Netherlands; Tinbergen Institute (TI), 1082 MS Amsterdam, Netherlands
Filippo De Marco: Department of Finance, Bocconi University, Milan 20136, Italy; Center for Economic and Policy Research, London EC1V 0DX, United Kingdom; Centre on Economics, Finance and Regulation (BAFFI), Milan 20136, Italy; Innocenzo Gasparini Institute for Economic Research (IGIER), Milan 20136, Milan

Management Science, 2024, vol. 70, issue 9, 6202-6219

Abstract: This paper investigates whether banks’ information technology (IT) can substitute for local branch presence in the provision of small business credit. Our identification strategy relies on loan-level data and the unique institutional features of the Italian public guarantee scheme during COVID-19. Despite the availability of online applications and low screening incentives, small business lending remains local even for first-time borrowers. However, IT partly mitigates the impact of local branch presence: banks with better IT provide more, cheaper, and faster guaranteed loans and lend more in areas where they have no bank branches, especially to first-time borrowers.

Keywords: public guarantees; COVID-19; small business credit; information technology; branch presence (search for similar items in EconPapers)
Date: 2024
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