Do Banks Lend Where they Borrow? A Study on Local Small Business Lending in the U.S.
U.S. Small Business Administration Office of Advocacy
First published December 2020
Lending to businesses in counties where a bank has no branches is highly sensitive to economic conditions. During the 2007 recession, distant lending contracted far more sharply than local lending, leaving the share of loans made at a distance lower than it had been at the beginning of the century. This study suggests that the presence of local bank branches might help small businesses weather economic downturns.