Working Paper: CEPR ID: DP15829
Authors: Shusen Qi; Ralph De Haas; Steven Ongena; Stefan Straetmans; Tamas Vadasz
Abstract: We present a model of credit market competition to derive key hypotheses about how information sharing between banks influences the spatial clustering of their branches. We then test these hypotheses using data on 56,555 branches owned by 614 banks across 19 countries. We find that information sharing incentivizes banks to establish branches in localities that are new to them but that are already served by other banks. The resultant branch clustering is associated with reduced spatial credit rationing, as information sharing enables firms to access credit from more distant banks. These findings underscore how information sharing makes it more important for banks to move closer to each other rather than closer to their borrowers.
Keywords: branch clustering; information sharing; spatial oligopoly model
JEL Codes: D43; G21; G28; L13; R51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| information sharing (O36) | likelihood of banks opening new branches (G21) |
| information sharing (O36) | branch clustering (C38) |
| information sharing (O36) | likelihood of banks opening new branches in areas with existing bank presence (G21) |
| information sharing (O36) | relationship banks benefit more from reduction in informational barriers (G21) |