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Working Paper
Does distance matter in banking?
Deregulation and technological change have reduced the transactions costs that led to the dominance of local financial service suppliers, leading some to question if distance still matters in banking. This debate has been particularly acute in small business banking, where transactions costs are believed to be particularly high. This paper provides a detailed review of the literature on distance in banking markets, highlighting the reasons why geographic proximity is believed to be important and examining the changes that may have affected its importance. Relying on new data from the 2003 ...
Working Paper
Small business loan turndowns, personal wealth and discrimination
Using newly available data from the Federal Reserve, we examine the impact of personal wealth on small business loan turndowns across demographic groups. Information on home ownership, home equity, and personal net worth excluding the business owner's home, in combination with data on the personal credit history of the principal owner, the business credit history of the firm, a rich set of additional explanatory variables, and information on the competitiveness of local banking markets, contributes to our understanding of the credit market experiences of small businesses across demographic ...
Working Paper
Examining the impact of credit access on small firm survivability
This paper examines the effects of credit availability on small firm survivability over the period 2004 to 2008 for non-publicly traded small enterprises. Using data from the 2003 Survey of Small Business Finances, we develop failure prediction models for a sample of small firms that were confirmed to have been in business as of December 2003, with particular attention to the impact of credit constraints. We find that credit constrained firms were significantly more likely to go out of business than non constrained firms. Moreover, credit constraint and credit access variables appear to be ...
Journal Article
Bank and nonbank competition for small business credit: evidence from the 1987 and 1993 national surveys of small business finances
Using newly available data from the Board's 1993 National Survey of Small Business Finances together with data from the 1987 survey, this article analyzes competition between banks and nonbanks in the U.S. market for small business credit. It explores nonbank competition as an explanation for the decline in banks' share of business lending by examining sources of credit used by small firms. It examines both the bank and nonbank shares of the dollar amount of credit to small businesses, including how these shares have changed from 1987 to 1993, and the incidence of small business borrowing, ...
Working Paper
Market definition and the analysis of antitrust in banking
In antitrust analysis of bank mergers, banking markets are viewed as geographically local, with a "cluster" of products as the relevant product line. This view is criticized as outdated, now that many bank products are offered by nonbank institutions and financial institutions' operations are increasingly national in scope. This paper reexamines the question of market definition in banking, using two micro data sets uniquely well-suited to the task. We find that local depositories remain the dominant supplier of key financial services to households and small businesses, with geographic ...