The quantity and character of out-of-market small business lending
Most small business lending from banks originates with institutions that have a local branch, but “out-of-market” lending does not. Supporting the view that proximity is conducive to lending, I find that only about 10 percent of small business lending is from banks with no branch in the local market. About half of this appears to be from banks with a branch in the same state, further supporting the role of proximity, while, at the same time, supporting the current regulatory practice of considering out-of-market loans when assessing local competitive conditions. I also find that out-of-market and in-market loans are of similar average size and are about equally likely to be secured by commercial real estate.
Volume (Year): (2008)
Issue (Month): ()
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- Jalal Akhavein & W. Scott Frame & Lawrence J. White, 2001.
"The Diffusion of Financial Innovations: An Examination of the Adoption of Small Business Credit Scoring By Large Banking Organizations,"
01-08, New York University, Leonard N. Stern School of Business, Department of Economics.
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- Kenneth P. Brevoort & Timothy H. Hannan, 2004. "Commercial lending and distance: evidence from Community Reinvestment Act data," Finance and Economics Discussion Series 2004-24, Board of Governors of the Federal Reserve System (U.S.).
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