Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/113750 
Year of Publication: 
2015
Series/Report no.: 
CESifo Working Paper No. 5424
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study the sensitivity of banks’ credit supply to small and medium size enterprises (SMEs) in the UK to banks’ financial condition before and during the financial crisis. Employing unique data on the geographical location of all bank branches in the UK, we connect firms’ access to bank credit to the financial condition (i.e., bank health and the use of core deposits) of all bank branches in the vicinity of the firm over the period 2004-2011. Before the crisis, banks’ local financial conditions did not influence credit availability irrespective of the functional distance (i.e., the distance between bank branch and bank headquarters). However, during the crisis, we find that SMEs with in their vicinity banks that have stronger financial condition face greater credit availability when the functional distance is low. Our results point to a “flight to headquarters” effect during the financial crisis.
Subjects: 
financial crisis
credit supply
flight to headquarters
flight to quality
bank organization
JEL: 
G21
G29
L14
Document Type: 
Working Paper
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