Download This PaperInformation Technology and Credit: Evidence from Public Guarantees
Management Science, Forthcoming
57 Pages Posted: 19 May 2020 Last revised: 6 Mar 2023
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Information Technology and Credit: Evidence from Public Guarantees
Public Guarantees for Small Businesses in Italy During COVID-19
Date Written: February 28, 2023
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.
Keywords: public guarantees, COVID-19, information technology, lending relationships
JEL Classification: G21, G28
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