Distance, bank organizational structure and credit

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

Research output: Chapter in Book/Report/Conference proceedingChapterScientificpeer-review


We survey the extant literature on the effects of both a banks organizational structure and the physical distance separating it from the borrower on lending decisions. The available evidence suggests that banks engage in spatial pricing, which can be rationalized by the existence of transportation costs and information asymmetries. Moreover, their ability to price-discriminate seems to be 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. This advantage is motivated theoretically by the existence of agency and communication costs within a bank. However, differences in data and methodology may explain the inconclusive evidence.
Original languageEnglish
Title of host publicationThe Changing Geography of Banking and Finance
EditorsP. Alessandrini, M. Fratianni, A. Zazzaro
Place of PublicationHeidelberg
PublisherSpringer Verlag
Number of pages316
ISBN (Print)139780387980775
Publication statusPublished - 2009


Dive into the research topics of 'Distance, bank organizational structure and credit'. Together they form a unique fingerprint.

Cite this