Information Technology and Credit: Evidence from Public Guarantees

56 Pages Posted: 19 May 2020 Last revised: 18 Oct 2022

See all articles by Fabrizio Core

Fabrizio Core

Erasmus University Rotterdam (EUR) - Department of Business Economics

Filippo De Marco

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; CEPR Financial Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 18, 2022

Abstract

This paper investigates whether banks' information technology (IT) can substitute for the importance of physical proximity between bank branches and small businesses in the provision of credit. Our identification strategy relies on loan level data and the 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, liquidity constraints, information technology, bank heterogeneity, interest rates

JEL Classification: G32, G38, H25, H32, E62

Suggested Citation

Core, Fabrizio and De Marco, Filippo, Information Technology and Credit: Evidence from Public Guarantees (October 18, 2022). Available at SSRN: https://ssrn.com/abstract=3604114 or http://dx.doi.org/10.2139/ssrn.3604114

Fabrizio Core

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )

Netherlands

Filippo De Marco (Contact Author)

Bocconi University - Department of Finance ( email )

Department of Finance
Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

CEPR Financial Economics ( email )

London
United Kingdom

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