Distance, bank organizational structure, and lending decisions

Geraldo Cerqueiro*, Hans Degryse, Steven Ongena

*Corresponding author for this work

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

20 Citations (Scopus)


We survey the extant literature on the effects of both a bank's 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
EditorsAlberto Zazzaro, Michele Fratianni, Pietro Alessandrini
PublisherSpringer US
Number of pages18
ISBN (Print)9780387980775
Publication statusPublished - 1 Dec 2009
Externally publishedYes


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