Does Distance Still Matter in Banking? Evidence from Local Credit Markets in Brazil

Does Distance Still Matter in Banking? Evidence from Local Credit Markets in Brazil

• Autor
• Thiago Pastorelli Rodrigues
• Resumo

• The distance between banks and borrowers can shape the amount and quality of information used in credit decisions. This paper examines how the distance between a bank’s headquarters and its operating locations affects credit supply. Using administrative data from the Central Bank of Brazil, we construct a bank-municipality panel for 2011-2022 and exploit within-bank and within-municipality variation over time. We find a negative relationship between distance and local credit: a 100-kilometer increase in distance is associated with a reduction of approximately 4% in credit supply. We also show that this result is attenuated for banks with longer local presence, particularly among private banks, suggesting that accumulated local experience mitigates distance-related informational frictions.

• Palavras-chave
• functional distance, credit supply, banking structure
• Modalidade
• Comunicação oral
• Área Temática
• Finanças Corporativas e Bancárias

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