Kenneth Carling () and Sofia Lundberg ()
Additional contact information
Kenneth Carling: Department of Economics, Postal: Dalarna University, SE-781 88 Borlänge, Sweden
Sofia Lundberg: Center for Regional Science, Postal: Umeå University, SE-901 87 Umeå, Sweden
Abstract: Does the Church Tower Principle, i.e. geographical proximity between borrowing firm and lending bank, matter in credit risk management? If so, the bank might expose itself to a greater risk by lending to distant firms and should therefore respond by rationing them harder. In this paper we incorporate the Church Tower Principle in a simple theoretical model and derive implications that are empirically testable. We use data on corporate loans granted 1994 to 2000 by a leading Swedish bank and find no evidence that the principle applies.
Keywords: Asymmetric information; credit rationing; duration model
30 pages, December 1, 2002
Full text files
wp_144.pdf
Questions (including download problems) about the papers in this series should be directed to Lena Löfgren ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2024-02-05 17:13:28.