Banking Without Branches

TUM Main Campus
Room 3539
Arcisstr. 21
80333 München
24 Apr 2024
5:00 pm (Central European Time)

Author: Prof. Bo Becker (Stockholm School of Economics)


Abstract: The decline in cash use and growing use of digital distribution for retail banking leads to a reduced need for bank branches. Lending to small and medium sized firms (SMEs) has not benefited as much from a digital transformation, and widespread branch closures may reduce their supply of credit. Using the closing of two thirds of Swedish branches as a laboratory, we document that corporate lending declines rapidly following branch closures, mainly via reduced lending to small and young firms. The reduced credit supply has real effects: local firms experience a decline in employment and sales and an increase in exit risk after branch closures. Our results thus suggest that the disappearance of bank branches have far-reaching implications for the economy.


Host: Christoph Kaserer