Communication within Banking Organizations and Small Business Lending

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

The Review of Financial Studies, 2020, vol. 33, issue 12, 5750-5783

Abstract: We investigate how communication within banks affects small business lending. Using travel times between a bank’s headquarters and its branches to proxy for the costs of communicating soft information, we exploit shocks to these travel times—the introduction of new airline routes—to evaluate the impact of within-bank communication costs on small business loans. 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 in-person communications that boost small-firm lending.

JEL-codes: D20 D22 D83 G21 G30 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (9)

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Working Paper: Communication within Banking Organizations and Small Business Lending (2019)
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