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Keep walking? Geographical proximity, religion, and relationship banking


Ongena, Steven; Beck, Thorsten; Sendeniz-Yüncü, Ilkay (2019). Keep walking? Geographical proximity, religion, and relationship banking. Journal of Corporate Finance, 55:49-68.

Abstract

We investigate the geographical proximity of firms to their relationship banks. We find that Islamic banks are more remote to their borrowers. We also find that the probability for a firm to connect to a bank substantially decreases in distance, but that the choice along bank characteristics determines how potent distance is in its impact. If the bank in the vicinity is an Islamic bank, distance plays a more muted role, especially in cities with a high conservative party vote and higher trust in religious institutions. Overall, these findings suggest that the presence of banks with certain characteristics in the vicinity may determine the within-firm and across-firm configurations of observable firm-bank connections.

Abstract

We investigate the geographical proximity of firms to their relationship banks. We find that Islamic banks are more remote to their borrowers. We also find that the probability for a firm to connect to a bank substantially decreases in distance, but that the choice along bank characteristics determines how potent distance is in its impact. If the bank in the vicinity is an Islamic bank, distance plays a more muted role, especially in cities with a high conservative party vote and higher trust in religious institutions. Overall, these findings suggest that the presence of banks with certain characteristics in the vicinity may determine the within-firm and across-firm configurations of observable firm-bank connections.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:1 April 2019
Deposited On:30 Oct 2019 10:03
Last Modified:30 Oct 2019 10:24
Publisher:Elsevier
ISSN:0929-1199
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/j.jcorpfin.2018.07.005
Related URLs:https://www.sciencedirect.com/science/article/pii/S0929119917307563 (Publisher)
Other Identification Number:merlin-id:16633

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