Keep Walking? Geographical Proximity, Religion, and Relationship Banking

39 Pages Posted: 25 Jul 2015 Last revised: 12 Jun 2018

See all articles by Thorsten Beck

Thorsten Beck

City University London - Sir John Cass Business School; Tilburg University - European Banking Center, CentER

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

Ilkay Sendeniz-Yuncu

Middle East Technical University

Date Written: June 04, 2018

Abstract

We investigate the geographical proximity of firms to their relationship banks. We find that Islamic banks are more remote to their borrowers. We also find that the probability for a firm to connect to a bank substantially decreases in distance, but that the choice along bank characteristics determines how potent distance is in its impact. If the bank in the vicinity is an Islamic bank, distance plays a more muted role, especially in cities with a high conservative party vote and higher trust in religious institutions. Overall, these findings suggest that the presence of banks with certain characteristics in the vicinity may determine the within-firm and across-firm configurations of observable firm-bank connections.

Keywords: geography of banking, Islamic banking

JEL Classification: G1, L1

Suggested Citation

Beck, Thorsten and Ongena, Steven R. G. and Sendeniz-Yuncu, Ilkay, Keep Walking? Geographical Proximity, Religion, and Relationship Banking (June 04, 2018). Available at SSRN: https://ssrn.com/abstract=2635385 or http://dx.doi.org/10.2139/ssrn.2635385

Thorsten Beck

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Steven R. G. Ongena (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Ilkay Sendeniz-Yuncu

Middle East Technical University ( email )

Ankara
Turkey

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