TY  - UNPD
A1  - Granja, João
A1  - Leuz, Christian
A1  - Rajan, Raghuram Govind
T1  - Going the extra mile : distant lending and credit cycles
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 623
N2  - We examine the degree to which competition amongst lenders interacts with the cyclicality in lending standards using a simple measure, the average physical distance of borrowers from banks’ branches. We propose that this novel measure captures the extent to which lenders are willing to stretch their lending portfolio. Consistent with this idea, we find a significant cyclical component in the evolution of lending distances. Distances widen considerably when credit conditions are lax and shorten considerably when credit conditions become tighter. Next, we show that a sharp departure from the trend in distance between banks and borrowers is indicative of increased risk taking. Finally, we provide evidence that as competition in banks’ local markets increases, their willingness to make loans at greater distance increases. Since average lending distance is easily measurable, it is potentially a useful measure for bank supervisors.
T3  - CFS working paper series - 623 
Y1  - 2019
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/43862
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-438620
IS  - October 2018
PB  - Center for Financial Studies
CY  - Frankfurt, M.
ER  -