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Soft information and the geography of SME bank lending

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  • Tianshu Zhao
  • Kul B. Luintel
  • Kent Matthews

Abstract

This paper explores the geography of bank lending to small and medium-sized enterprises (SMEs) and tests the argument that large institutions with complex organizational structures are better able to filter ‘hard’ information than ‘soft’ information. Mortgage lending is used as a control to illustrate the case of ‘hard’ and ‘soft’ information. Using data on individual bank lending to SMEs and mortgages by postcode area in Great Britain for the period 2013(2)–2014(4), the paper explains the spatial dispersion of SME lending in the UK in terms of geographical distance and supports the policy of establishing a geographically decentralized financial system as a counterbalance.

Suggested Citation

  • Tianshu Zhao & Kul B. Luintel & Kent Matthews, 2021. "Soft information and the geography of SME bank lending," Regional Studies, Taylor & Francis Journals, vol. 55(4), pages 679-692, April.
    • Handle: RePEc:taf:regstd:v:55:y:2021:i:4:p:679-692
    DOI: 10.1080/00343404.2020.1851024
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    Cited by:

    1. Modina, Michele & Pietrovito, Filomena & Gallucci, Carmen & Formisano, Vincenzo, 2023. "Predicting SMEs’ default risk: Evidence from bank-firm relationship data," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 254-268.
    2. Flögel, Franz & Hejnová, Tereza, 2021. "The effects of regional banks on economic resilience during the COVID-19 pandemic and the global financial crisis a cross-country comparison of the European countries," IAT Discussion Papers 21/01, Institut Arbeit und Technik (IAT), Westfälische Hochschule, University of Applied Sciences.

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