Publication: “Sorry, We're Closed” Bank Branch Closures, Loan Pricing, and Information Asymmetries
“Sorry, We're Closed” Bank Branch Closures, Loan Pricing, and Information Asymmetries
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Bonfim, D., Nogueira, G., & Ongena, S. (2021). “Sorry, We’re Closed” Bank Branch Closures, Loan Pricing, and Information Asymmetries. Review of Finance, 25(4), 1211–1259. https://doi.org/10.1093/rof/rfaa036
Abstract
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We study local loan conditions when, under external pressure, banks close branches. After the closure of nearby branches of their credit granting banks, firms that locally and hurriedly transfer to other banks receive an equivalent interest rate. However, and in stark contrast, where branch closures do not take place firms that purposely switch banks receive a 63 basis points discount. At the same time, the loan default rate for the (more expensive) transfer loans is on average a full percentage point lower than that for the (cheaper)
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- Bonfim, Diana
- Nogueira, Gil
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Bonfim, D., Nogueira, G., & Ongena, S. (2021). “Sorry, We’re Closed” Bank Branch Closures, Loan Pricing, and Information Asymmetries. Review of Finance, 25(4), 1211–1259. https://doi.org/10.1093/rof/rfaa036
