Abstract
This paper studies the effects of bank branches’ access to broadband internet on credit to non-financial firms. We rely on granular micro-data from the Italian Credit Register and quasi-experimental variation associated with the pre-existent telephone infrastructure to address the endogenous diffusion of broadband. We find that branches in municipalities reached by fast internet increase loan supply, both at the extensive and intensive margin, and reduce interest rates. The credit expansion goes through higher branch productivity, wider geographical reach, and lower local market concentration. Broadband induces banks to acquire more information after loan origination, which is used to improve monitoring.
The paper is joint with Angelo D’Andrea and Marco Pelosi
Invited by: Guglielmo Barone
Local Organizer: Giovanni Angelini