Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82488
Authors: 
Carling, Kenneth
Lundberg, Sofia
Year of Publication: 
2002
Series/Report no.: 
Sveriges Riksbank Working Paper Series 144
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.
Subjects: 
Asymmetric information
credit rationing
duration model
JEL: 
D82
G21
Document Type: 
Working Paper

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