Does IT Help? Information Technology in Banking and Entrepreneurship

75 Pages Posted: 26 Apr 2023

See all articles by Toni Ahnert

Toni Ahnert

European Central Bank, Financial Research Division; Centre for Economic Policy Research (CEPR)

Sebastian Doerr

Bank for International Settlements; Centre for Economic Policy Research (CEPR)

Nicola Pierri

International Monetary Fund (IMF)

Yannick Timmer

International Monetary Fund (IMF) - Research Department; Board of Governors of the Federal Reserve System

Multiple version iconThere are 3 versions of this paper

Date Written: April 20, 2023

Abstract

We provide novel evidence on the importance of information technology (IT) in banking for entrepreneurship. We establish that job creation by young firms is stronger in US counties more exposed to IT-intensive banks. We present evidence consistent with banks' IT adoption facilitating entrepreneurship by improving banks' use of hard information, in particular collateral. At the county level, entrepreneurship increases by more in IT-exposed counties when house prices rise. Bank-level regressions confirm that banks' IT makes credit supply more responsive to changes in house prices, and that it reduces the importance of geographical distance between borrowers and lenders.

Keywords: technology in banking, entrepreneurship, information technology, collateral, screening

JEL Classification: D82, G21, L26

Suggested Citation

Ahnert, Toni and Doerr, Sebastian and Pierri, Nicola and Timmer, Yannick, Does IT Help? Information Technology in Banking and Entrepreneurship (April 20, 2023). Available at SSRN: https://ssrn.com/abstract=4424285 or http://dx.doi.org/10.2139/ssrn.4424285

Toni Ahnert

European Central Bank, Financial Research Division ( email )

ECB Tower
Sonnemannstraße 20
Frankfurt am Main

HOME PAGE: http://toniahnert.com

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sebastian Doerr (Contact Author)

Bank for International Settlements ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland

HOME PAGE: http://www.sdoerr.com

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Nicola Pierri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yannick Timmer

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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