[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/15799.html
   My bibliography  Save this paper

Information Technology and Credit: Evidence from Public Guarantees

Author

Listed:
  • De Marco, Filippo
  • Core, Fabrizio
Abstract
This paper investigates whether banks' information technology (IT) can substitute for local branch presence in the provision of small business credit. Our identification strategy relies on loan-level data and the unique institutional features of the Italian public guarantee scheme during Covid-19. Despite the availability of online applications and low screening incentives, small business lending remains local, even for first-time borrowers. However, IT partly mitigates the impact of local branch presence: banks with better IT provide more, cheaper and faster guaranteed loans and lend more in areas where they have no bank branches, especially to first-time borrowers.

Suggested Citation

  • De Marco, Filippo & Core, Fabrizio, 2021. "Information Technology and Credit: Evidence from Public Guarantees," CEPR Discussion Papers 15799, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15799
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP15799
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hans Degryse & Steven Ongena, 2005. "Distance, Lending Relationships, and Competition," Journal of Finance, American Finance Association, vol. 60(1), pages 231-266, February.
    2. Beck, Thorsten & Klapper, Leora F. & Mendoza, Juan Carlos, 2010. "The typology of partial credit guarantee funds around the world," Journal of Financial Stability, Elsevier, vol. 6(1), pages 10-25, April.
    3. Sapienza, Paola, 2004. "The effects of government ownership on bank lending," Journal of Financial Economics, Elsevier, vol. 72(2), pages 357-384, May.
    4. Croce, Mariano & Farroni, Paolo & Wolfskeil, Isabella, 2020. "When the Markets Get COVID: COntagion, Viruses, and Information Diffusion," CEPR Discussion Papers 14674, C.E.P.R. Discussion Papers.
    5. Stefano Ramelli & Alexander F Wagner, 2020. "Feverish Stock Price Reactions to COVID-19," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 9(3), pages 622-655.
    6. Vadim Elenev & Tim Landvoigt & Stijn Van Nieuwerburgh, 2022. "Can the covid bailouts save the economy?," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 37(110), pages 277-330.
    7. Alexander W. Bartik & Marianne Bertrand & Zoë B. Cullen & Edward L. Glaeser & Michael Luca & Christopher T. Stanton, 2020. "How Are Small Businesses Adjusting to COVID-19? Early Evidence from a Survey," NBER Working Papers 26989, National Bureau of Economic Research, Inc.
    8. Erel, Isil & Liebersohn, Jack, 2020. "Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program," Working Paper Series 2020-16, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    9. Allen N. Berger & Christa H. S. Bouwman & Dasol Kim, 2017. "Small Bank Comparative Advantages in Alleviating Financial Constraints and Providing Liquidity Insurance over Time," The Review of Financial Studies, Society for Financial Studies, vol. 30(10), pages 3416-3454.
    10. Granja, João & Makridis, Christos & Yannelis, Constantine & Zwick, Eric, 2022. "Did the paycheck protection program hit the target?," Journal of Financial Economics, Elsevier, vol. 145(3), pages 725-761.
    11. Isil Erel & Jack Liebersohn, 2020. "Does FinTech Substitute for Banks? Evidence from the Paycheck Protection Program," NBER Working Papers 27659, National Bureau of Economic Research, Inc.
    12. Hans Degryse & Nancy Masschelein & Janet Mitchell, 2004. "SMEs and Bank Lending Relationships: the Impact of Mergers," Working Paper Research 46, National Bank of Belgium.
    13. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    14. Lei Li & Philip Strahan, 2020. "Who Supplies PPP Loans (And Does it Matter)? Banks, Relationships and the COVID Crisis," NBER Working Papers 28286, National Bureau of Economic Research, Inc.
    15. J. David Brown & John S. Earle, 2017. "Finance and Growth at the Firm Level: Evidence from SBA Loans," Journal of Finance, American Finance Association, vol. 72(3), pages 1039-1080, June.
    16. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1371-1411.
    17. Petersen, Mitchell A & Rajan, Raghuram G, 1994. "The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Duchin, Ran & Martin, Xiumin & Michaely, Roni & Wang, Hanmeng, 2022. "Concierge treatment from banks: Evidence from the paycheck protection program," Journal of Corporate Finance, Elsevier, vol. 72(C).
    2. José Renato Haas Ornelas & Alvaro Pedraza & Claudia Ruiz-Ortega & Thiago Christiano Silva, 2021. "Credit Allocation When Private Banks Distribute Government Loans," Working Papers Series 548, Central Bank of Brazil, Research Department.
    3. Anna Cororaton & Samuel Rosen, 2021. "Public Firm Borrowers of the U.S. Paycheck Protection Program [The risk of being a fallen angel and the corporate dash for cash in the midst of COVID]," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 10(4), pages 641-693.
    4. Lei Li & Philip Strahan, 2020. "Who Supplies PPP Loans (And Does it Matter)? Banks, Relationships and the COVID Crisis," NBER Working Papers 28286, National Bureau of Economic Research, Inc.
    5. Sabrina T. Howell & Theresa Kuchler & David Snitkof & Johannes Stroebel & Jun Wong, 2021. "Lender Automation and Racial Disparities in Credit Access," NBER Working Papers 29364, National Bureau of Economic Research, Inc.
    6. Sabrina T. Howell & Theresa Kuchler & David Snitkof & Johannes Stroebel & Jun Wong, 2021. "Racial Disparities in Access to Small Business Credit: Evidence from the Paycheck Protection Program," CESifo Working Paper Series 9345, CESifo.
    7. Tetyana Balyuk & Nagpurnanand R. Prabhala & Manju Puri, 2020. "Indirect Costs of Government Aid and Intermediary Supply Effects: Lessons From the Paycheck Protection Program," NBER Working Papers 28114, National Bureau of Economic Research, Inc.
    8. Meghana Ayyagari & Yuxi Cheng & Ariel Weinberger, 2022. "Surviving Pandemics: The Role of Spillovers," CESifo Working Paper Series 9891, CESifo.
    9. Karakaplan, Mustafa U., 2021. "This time is really different: The multiplier effect of the Paycheck Protection Program (PPP) on small business bank loans," Journal of Banking & Finance, Elsevier, vol. 133(C).
    10. Erel, Isil & Liebersohn, Jack, 2022. "Can FinTech reduce disparities in access to finance? Evidence from the Paycheck Protection Program," Journal of Financial Economics, Elsevier, vol. 146(1), pages 90-118.
    11. Desi Volker, 2022. "The Paycheck Protection Program Liquidity Facility," Economic Policy Review, Federal Reserve Bank of New York, vol. 28(1), July.
    12. Choudhary, M. Ali & Jain, Anil, 2022. "Finance and inequality: The distributional impacts of bank credit rationing," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    13. Sriya Anbil & Mark A. Carlson & Mary-Frances Styczynski, 2021. "The Effect of the PPPLF on PPP Lending by Commercial Banks," Finance and Economics Discussion Series 2021-030, Board of Governors of the Federal Reserve System (U.S.).
    14. Olivier De Jonghe & Hans Dewachter & Klaas Mulier & Steven Ongena & Glenn Schepens, 2020. "Some Borrowers Are More Equal than Others: Bank Funding Shocks and Credit Reallocation [A theory of systemic risk and design of prudential bank regulation]," Review of Finance, European Finance Association, vol. 24(1), pages 1-43.
    15. Catherine Fuss & Philip Vermeulen, 2006. "The response of firms\u2019 investment and financing to adverse cash flow shocks : the role of bank relationships," Working Paper Research 87, National Bank of Belgium.
    16. Chodorow-Reich, Gabriel & Darmouni, Olivier & Luck, Stephan & Plosser, Matthew, 2022. "Bank liquidity provision across the firm size distribution," Journal of Financial Economics, Elsevier, vol. 144(3), pages 908-932.
    17. José María Liberti & Mitchell A. Petersen, 2018. "Information: Hard and Soft," NBER Working Papers 25075, National Bureau of Economic Research, Inc.
    18. David Autor & David Cho & Leland D. Crane & Mita Goldar & Byron Lutz & Joshua Montes & William B. Peterman & David Ratner & Daniel Villar & Ahu Yildirmaz, 2022. "The $800 Billion Paycheck Protection Program: Where Did the Money Go and Why Did It Go There?," Journal of Economic Perspectives, American Economic Association, vol. 36(2), pages 55-80, Spring.
    19. Filippo De Marco & Silvio Petriconi, 2019. "Bank Competition and Information Production," BAFFI CAREFIN Working Papers 19130, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    20. Lopez, Jose A. & Spiegel, Mark M., 2023. "Small business lending under the PPP and PPPLF programs," Journal of Financial Intermediation, Elsevier, vol. 53(C).

    More about this item

    Keywords

    Public guarantees; Covid-19; Liquidity constraints; Information technology; Lending relationships;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:15799. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.