Distance, Bank Organizational Structure and Credit

H.A. Degryse, G.M. Cerqueiro, S. Ongena

Research output: Working paperDiscussion paperOther research output

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Abstract

We survey the extant literature on the effects of both a bank’s organizational structure and the physical distance separating it from the lender on lending decisions. Banks do engage in spatial pricing, where the underlying mechanism can be both transportation costs and information asymmetries. Moreover, their ability to discriminate is bounded by the reach of the lending technology of surrounding competitors. It is not entirely clear from an empirical viewpoint that small, decentralized banks have a comparative advantage in relationship lending. Differences in data and methodology may explain these mixed findings. If it does exist, this advantage can be motivated theoretically by the existence of agency and communication costs within a bank.
Original languageEnglish
Place of PublicationTilburg
PublisherTILEC
Number of pages31
Volume2007-018
Publication statusPublished - 2007

Publication series

NameTILEC Discussion Paper
Volume2007-018

Fingerprint

Organizational structure
Credit
Transportation costs
Agency costs
Information asymmetry
Comparative advantage
Competitors
Cost asymmetry
Methodology
Lending decisions
Lending
Relationship lending
Communication cost
Pricing

Keywords

  • financial intermediation
  • distance
  • organizations
  • loan rates
  • collateral

Cite this

Degryse, H. A., Cerqueiro, G. M., & Ongena, S. (2007). Distance, Bank Organizational Structure and Credit. (TILEC Discussion Paper; Vol. 2007-018). Tilburg: TILEC.
Degryse, H.A. ; Cerqueiro, G.M. ; Ongena, S. / Distance, Bank Organizational Structure and Credit. Tilburg : TILEC, 2007. (TILEC Discussion Paper).
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Degryse, HA, Cerqueiro, GM & Ongena, S 2007 'Distance, Bank Organizational Structure and Credit' TILEC Discussion Paper, vol. 2007-018, TILEC, Tilburg.

Distance, Bank Organizational Structure and Credit. / Degryse, H.A.; Cerqueiro, G.M.; Ongena, S.

Tilburg : TILEC, 2007. (TILEC Discussion Paper; Vol. 2007-018).

Research output: Working paperDiscussion paperOther research output

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Degryse HA, Cerqueiro GM, Ongena S. Distance, Bank Organizational Structure and Credit. Tilburg: TILEC. 2007. (TILEC Discussion Paper).