Bank Local Specialization

Anne Duquerroy (), Clément Mazet-Sonilhac (), Jean-Stéphane Mésonnier and Daniel Paravisini ()
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Anne Duquerroy: Centre de recherche de la Banque de France - Banque de France
Clément Mazet-Sonilhac: Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique
Daniel Paravisini: LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research

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Abstract: Using micro-data of the universe of bank-SME relationships in France, we show that banks specialize locally (at the branch level) by industry, and that this specialization shapes the equilibrium amount of borrowing by small firms. For identification, we exploit the reallocation of local clients from closed down branches to nearby branches of the same bank, which induced quasi-random variation in the match between a firm's industry and the industry of specialization of the lending branch. We show that branch reallocation leads, on average, to a substantial and permanent decline in small firm borrowing. This decline is twice larger for firms whose accounts are reallocated from branches less specialized in their industry than the original one.

Keywords: Bank specialization; SMEs; Relationship banking; Branch closures (search for similar items in EconPapers)
Date: 2022-02-03
New Economics Papers: this item is included in nep-sbm
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03812807
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Citations: View citations in EconPapers (1)

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Working Paper: Bank Local Specialization (2022)
Working Paper: Bank Local Specialization (2022)
Working Paper: Bank Local Specialization (2022)
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