Distance, Bank Organizational Structure, and Lending Decisions

  • Geraldo CerqueiroEmail author
  • Hans Degryse
  • Steven Ongena


We survey the extant literature on the effects of both a bank's organizational structure and the physical distance separating it from the borrower on lending decisions. The available evidence suggests that banks engage in spatial pricing, which can be rationalized by the existence of transportation costs and information asymmetries. Moreover, their ability to price-discriminate seems to be bounded by the reach of the lending technology of surrounding competitors. It is not entirely clear from an empirical viewpoint that small, decentralized banks have a comparative advantage in relationship lending. This advantage is motivated theoretically by the existence of agency and communication costs within a bank. However, differences in data and methodology may explain the inconclusive evidence.


Transportation Cost Information Asymmetry Credit Market Small Bank Lending Bank 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



We gratefully acknowledge financial support from NWO-The Netherlands and FWO-Flanders.


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© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of FinanceCentER, Tilburg UniversityTilburgThe Netherlands

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