Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299288 
Year of Publication: 
2024
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 430
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
The decline in cash use and growing use of digital distribution for retail banking leads to a reduced need for bank branches. Lending to small and medium sized firms (SMEs) has not benefited as much from a digital transformation, and widespread branch closures may reduce their supply of credit. Using the closing of two thirds of Swedish branches as a laboratory, we document that corporate lending declines rapidly following branch closures, mainly via reduced lending to small and young firms. The reduced credit supply has real effects: local firms experience a decline in employment and sales and an increase in exit risk after branch closures. Our results thus suggest that the disappearance of bank branches have far-reaching implications for the economy.
Subjects: 
Banks
branch closures
credit supply
JEL: 
D22
G21
G32
R12
R32
Document Type: 
Working Paper

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