Broadband and Bank Intermediation

Mer, 12/01/2022 - 12:00 / 13:00

405, Viale Romania

Speaker: Angelo D'Andrea , Università Bocconi

Abstract

This paper studies the effects of access to broadband internet on bank credit to non-financial firms. We rely on granular micro-data from Italy and an IV empirical strategy to address the endogeneity of broadband diffusion. We find that banks with branches in municipalities reached by fast internet increase loan supply, both at the extensive and the intensive margin, and reduce credit price. We document that the expansion of credit goes through three main channels: banks increase productivity; they expand their geographical scope; and competition in municipalities reached by fast internet intensifies. Broadband internet also leads banks to make internal credit reallocation by moving credit away from smaller municipalities.