Distance, Lending Relationships, and Competition

Hans Degryse and Steven Ongena

Journal of Finance, 2005, vol. 60, issue 1, 231-266

Abstract: We study the effect on loan conditions of geographical distance between firms, the lending bank, and all other banks in the vicinity. For our study, we employ detailed contract 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 distance between the firm and competing banks. Transportation costs cause the spatial price discrimination we observe.

Date: 2005
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https://doi.org/10.1111/j.1540-6261.2005.00729.x

Related works:
Working Paper: Distance, Lending Relationships, and Competition (2003)
Working Paper: Distance, Lending Relationships, and Competition (2003)
Working Paper: Distance, Lending Relationships, and Competition (2002)
Working Paper: Distance, Lending Relationships and Competition (2002)
Working Paper: Distance, Lending Relationships and Competition (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:60:y:2005:i:1:p:231-266

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