Distance, Lending Relationships, and Competition
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. Copyright 2005 by The American Finance Association.
Year of publication: |
2005
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Authors: | DEGRYSE, HANS ; ONGENA, STEVEN |
Published in: |
Journal of Finance. - American Finance Association - AFA, ISSN 1540-6261. - Vol. 60.2005, 1, p. 231-266
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Publisher: |
American Finance Association - AFA |
Saved in:
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