Is Lending Distance Really Changing? Distance Dynamics and Loan Composition in Small Business Lending

Robert M. Adams, Kenneth Brevoort and John Driscoll
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Robert M. Adams: https://www.federalreserve.gov/econres/robert-m-adams.htm

No 2021-011, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Has information technology improved small businesses' access to credit by hardening the information used in loan underwriting and reducing the importance of proximity to lenders? Previous research, pointing to increasing average lending distances, suggests that it has. But this conclusion can obscure differences across loans and lenders. Using over 20 years of Community Reinvestment Act data on small business lending, we find that while average distances have increased substantially, distances at individual banks remain unchanged. Instead, average distance has increased because a small group of lenders specializing in high-volume, small-loan lending nationwide have increased their share of small business lending by 10 percentage points. Our findings imply that small businesses continue to depend on local banks.

Keywords: Banks; Credit Card; Small Business Lending (search for similar items in EconPapers)
JEL-codes: G21 G38 L25 R21 (search for similar items in EconPapers)
Pages: 43 p.
Date: 2021-02-16
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent, nep-fdg, nep-ict and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Is lending distance really changing? Distance dynamics and loan composition in small business lending (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2021-11

DOI: 10.17016/FEDS.2021.011

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