Global Banking and Local Markets
33 Pages Posted: 16 Jan 2009
Date Written: November 23, 2008
In the early 1990s, a widely-shared opinion among scholars and practitioners was that the importance of physical proximity between banks and borrowers would be doomed to drastically decrease over time and, put in extreme terms, the end of banking geography would become a real possibility. However, the empirical evidence show an unrelenting importance of local credit markets for small borrowers and local economic development. In the paper, we selectively review the literature on the real effects of bank consolidation and produce new evidence on the role of headquarter-to-branch functional distance on relationship lending.
Keywords: Global Banking, Local Banking Development, Functional Distance
JEL Classification: G21, G34, R12, R51
Suggested Citation: Suggested Citation