34 Pages Posted: 25 Jul 2015 Last revised: 17 May 2016
Date Written: May 16, 2016
We investigate the geographical proximity of firms to their relationship banks. We find that (compared to the firms' average bank) Islamic, foreign and state banks are more, and large banks less 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. For example, if the bank in the vicinity is an Islamic bank, distance plays a more muted role, especially in cities in the Mediterranean and Aegean regions, as well as in cities with a high conservative party vote and higher trust in religious institutions. Also when engaging with small, foreign or state banks physical distance no longer plays a crucial role in determining the firms` choices. Overall these findings suggest that the presence of banks with certain characteristics in the vicinity of firms 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: Suggested Citation
Beck, Thorsten and Ongena, Steven and Sendeniz-Yuncu, Ilkay, Keep Walking? Geographical Proximity, Religion, and Relationship Banking (May 16, 2016). Available at SSRN: https://ssrn.com/abstract=2635385 or http://dx.doi.org/10.2139/ssrn.2635385