Is lending distance really changing? Distance dynamics and loan composition in small business lending

Robert M. Adams, Kenneth P. Brevoort and John Driscoll

Journal of Banking & Finance, 2023, vol. 156, issue C

Abstract: The increasing average distance between small businesses and their lenders has been used to argue that technological changes have allowed banks to lend at longer distances. Generally, studies assume that distance changes are uniform across loans and lenders. Our paper shows that, while average distance has increased substantially over the past two decades, banks themselves have not materially increased their lending distances. Instead, longer average distance was caused by a small number of banks that specialize in originating very small loans nationwide quadrupling their share of lending. Outside of these very small loans, small businesses remain dependent on local banks.

Keywords: Banking; Small business lending; Soft information; Lending distance (search for similar items in EconPapers)
JEL-codes: G21 G38 L25 R21 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Is Lending Distance Really Changing? Distance Dynamics and Loan Composition in Small Business Lending (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:156:y:2023:i:c:s0378426623001978

DOI: 10.1016/j.jbankfin.2023.107006

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