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The relationship between borrowers and lenders can reveal a lot of information regarding loan pricing, information costs, and competition. In this study, the authors investigate the impact of FinTech lenders on Paycheck Protection Program (PPP) loan disbursement. Specifically, the authors investigate financial technology companies’ ability to provide loans at greater distances, expanding the available resources for businesses struggling during the Covid-19 pandemic. The authors find that not only were FinTechs able to lend at greater distances, but also they provided loans to firms that were younger and had less bank competition in their headquarters’ zip codes. The results remain consistent and are generalizable to the complete population of PPP loans.

This study aims to examine empirically the relationship between loan denials and lender distance and location.

This study uses the 2003 Survey of Small Business Finance (SSBF) to draw the sample. This survey, conducted by the Board of Governors of the Federal Reserve, collects information on small businesses' use of financial services. In total the survey gathered information representing 4,240 firms (all sample firms have fewer than 500 employees). A number of statistical tests are conducted to test the relationship between loan denials and lender characteristics.

The results of this study indicate that credit scores have no impact on the geographical location and lender distance; however, lender distance decreases with the length of relationship with the lender and the age of the business. This suggests that informationally opaque businesses seek out lenders nearby to maximize the value of soft information, whereas established businesses put no value on that. However, the probability of loan denial is not affected by the distance between the borrower and the lender. At the same time borrowers in rural areas are more likely to be denied. Thus, there seems to be a location effect in lending.

This study closes a gap in the literature with regard to the value of soft information in light of increasing bank consolidation. Furthermore, this paper uses borrower data, making this – to the authors' knowledge – the first study on lending distance that does not utilize lender data.

Small- and medium-sized enterprises (SMEs) depend on a large measure on commercial banks for external capital, and US SMEs are increasingly experiencing bank credit constraints and resorting to costly alternatives. The purpose of this paper is to investigate the impact of lender organizational complexity on SME financing shortfalls. In particular, it examines the credit shortage effects associated with the SME's reliance on bank holding company (BHC) owned, as opposed to independent, lenders.

Building on agency–theoretic rationales, the authors posit that both hierarchical and horizontal complexity associated with present-day BHC structures will diminish an affiliated bank's ability and willingness to properly underwrite SME credit needs. Consequently, they hypothesize that SMEs whose commercial lenders are BHC affiliates are likely to experience greater credit shortages. This hypothesis was tested using exhaustive financial data from a large and nationally representative sample of US SMEs.

Greater SME reliance on loans from BHC lenders was found to be associated with a greater use of late trade–credit payments. The latter is an expensive form of financing and a generally accepted indicator of shortages in conventional (and cheaper) bank credit.

Despite the evolution toward more complex bank organizational forms, especially among community banks, the implications for SME lending are not yet fully understood. This paper's contribution is to offer a first examination of the impact of post-deregulation BHC structures on SME financing shortfalls.

The purpose of this paper is to examine both the characteristics of the business customers and the types of venture which make use of online loan applications. Despite the growth in the use of technology in banking and the advent of online banking, little research has been conducted on the factors underlying online loan application behaviour amongst business banking customers.

A multivariate analysis is conducted on a USA dataset to empirically test the hypotheses derived in this paper. The empirical evidence is drawn from the US Survey of Small Business Finances, which contains 3,561 sample ventures, representing 5.3 million small businesses in the USA.

The paper finds that online loan behaviour is largely determined by the characteristics of the entrepreneur, rather than that of the venture. It is also found that factors that trust, evident in the length of the relationship between the applicants and their primary lender, is important. Moderating these effects is further evidence that suggests the number of lenders and distance between lenders and applicants has a marked effect on online loan behaviour.

This paper identifies the factors determining small business online loan application behaviour. This is important because the nature of online loan behaviour is changing the existing relationships between banks and customers. Whilst online loan applications afford banks the opportunity to substantially reduce costs, the danger is that long term relationships with customers are harder to cement.

The purpose of this paper is to examine if credit rationing persists even in the era of financial liberalization, the extent to which individual, firm and loan characteristics influence the rationing behavior of commercial banks and whether the agricultural sector is discriminated against in the commercial bank credit market.

The study employed a probit model with marginal effects and a generalized Blinder-Oaxaca decomposition estimation on a randomly selected data of 1,239 entrepreneurs from eight commercial banks’ credit records about their individual, firm and loan characteristics.

The study revealed that credit rationing persists and that applying for a relatively longer payment period, providing collateral and guarantor, being illiterate, being relatively older and being in the agricultural sector increases the likelihood of being credit rationed, while having some relationship with the bank, having non-mandatory savings and applying from a bank with relatively high interest rates reduce the likelihood of being credit rationed. The study also revealed a credit gap of 17.77 percent and a positive discrimination against borrowers in the agricultural sector as the gap was largely being influenced by unexplained factors.

The research was intended to cover a large number of commercial banks in Ghana. However, most of the banks were unwilling to provide such information about their borrowers; hence, the research was limited to only eight commercial banks who provided the author with the information needed for the study.

The study concludes that policies that enhance human capital, women, and older access to credit and agricultural-oriented financial services and others, will go a long way to reduce rationing and increase access to credit, especially to the agricultural sector.

The research proposes the use of group lending as a form of collateral and monitoring to ease risks and default, and hence supports sustainable funding to increase access and outreach.

The paper looks at the comprehensive way about the various factors determining credit rationing in that it considers not only the individual, economic/firm and loan characteristics but also the extent to which discrimination toward the agricultural sector exists in the commercial banks credit market.

Users of smallholder farmer microfinance are able to make enough returns to repay credits advanced to them. However, they are in dire need of financial capital such that they are inconsiderate of farmer- and credit-specific characteristics when participating in a microfinance programme. This study analyses perceptions of stakeholders regarding select farmer and credit characteristics within the microfinance industry. The study identifies and analyses the factors that influence participation in a microfinance programme by farmers using the logistic regression model. The purpose of this paper is to widen the knowledge base of rural agricultural finance, including factors that influence participation in microfinance intervention(s) thereof.

A total of 104 participants and 120 non-participant farmers in microfinance programmes were interviewed using a semi-structured questionnaire by applying the multistage sampling technique. The paper applied the logistic regression model in which farmer- and credit-specific characteristics were used to estimate the probabilities of participation.

The logistic regression results showed that distance, interest rate, experience, membership of farmer-based organisation, number of dependants, household, gender and age were statistically significant farmer- and credit-specific characteristics that influence participation in microfinance programmes. Interest rate and distance exact negative significance influence on participation, whereas membership of farmer-based organisations, experience, gender, household head and age influence participation positively. Reduction in the interest rate and expansion of microfinance to very remote areas rather than locations in urban areas are crucial in terms of improving participation.

The paper used data from only farmers so there is a limit to which the results can be generalised for all microfinance users. It may be relevant to undertake a study that considers non-farm enterprises.

This paper brings to light the need to develop well-structured microfinance facilities that meet the specific needs of the rural poor in transitioning economies while taking into consideration critical factors affecting participation before the establishment of such programmes.

This paper provides empirical evidence to show that farmer- and credit-specific characteristics are essential to ensure participation and success of microfinance programmes thereof.

The aim of this paper is to examine the question of the specialness of banks by addressing concerns raised in the recent studies and deriving policy implications for the future of banking. The specialness of banks has been well documented in the finance literature. More recent research, however, calls into question the special nature of banks.

We use event study methodology to study 423 bank loan announcements from 1988 to 1996 and examine the returns relative to proxies for the bank ' s monitoring incentives and skill using ordinary least squares (OLS) regressions.

Our results indicate borrower abnormal announcement returns are positively related to proxies for the bank ' s monitoring incentives and skill as measured by: the ratio of uninsured deposits to total loans; a risk-adjusted measure of recovered charge-offs; and the relative bank-to-borrower capital ratio.

The results reveal how the fragile nature of the bank ' s structure improves the bank ' s incentives to monitor borrowers.

Our results can inform the current debates in the Fed and in Congress surrounding reapplying the Glass-Steagall Act and limiting the size of banks. We show that banks were special before the Gramm-Leach-Bliley Act and when fewer banks belonged to the too-big-to-fail category. This suggests that reregulating banks to re-establish their fragile nature will re-establish them as information-generating intermediaries instead of just transactional institutions.

Our findings have not previously been documented but are broadly consistent with models developed by Calomiris and Kahn (1991) and especially Diamond and Rajan (2001).

The purpose of this paper is to investigate the role of geographic distance in crowdfunding.

Under the assumption that investors are more likely to be attracted to local borrowers, this paper investigates whether this phenomenon is because of affinity or an informational advantage. The authors define a local investor as an investor who is from the same US state as the borrower.

The paper finds that loans offered by local investors have lower interest rates and a lower default probability. In addition, when the level of local investment is highest, the effects of informational advantage are strengthened.

Overall, the evidence of this paper suggests that local investors have an informational advantage over more geographically distant investors.

This paper contributes to the ongoing debate regarding whether geographic distance continues to be important in the internet age.

This chapter examines whether the geographic distance between subsidiaries of multinational banks and their headquarters is an important factor in determining the performance of the subsidiaries. Using various performance indicators of 340 subsidiaries in 54 emerging and developing economies from 69 global banks during the years 1994–2008, we find evidence that first, the distance constraint adversely affects loan growth, profitability, and performance of foreign bank subsidiaries, and second, the unfavorable information asymmetry faced by foreign banks, due to the distance constraint, in financing foreign clients cannot be fully overcome by establishing their presence abroad such as setting up their foreign subsidiaries. We further examine if the effect of distance is symmetric across different banks and countries and find the following various economic, financial, and institutional factors to affect the strength of distance constraints in the multinational banking activities: the entry mode of foreign banks, the history of presence in local markets, the existence of credit information institutions, the cultural similarity between the home and host markets, financial depth, financial crisis periods, the stock market development, the banking market structure in host markets, and the hierarchy of the subsidiary in the multinational banking conglomerate.