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Information Technology and Credit: Evidence from Public Guarantees

Author

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  • Fabrizio Core

    (Department of Business Economics, Erasmus University, 3062 PA Rotterdam, Netherlands; Erasmus Research Institute of Management (ERIM), 3062 PA Rotterdam, Netherlands; Tinbergen Institute (TI), 1082 MS Amsterdam, Netherlands)

  • Filippo De Marco

    (Department of Finance, Bocconi University, Milan 20136, Italy; Center for Economic and Policy Research, London EC1V 0DX, United Kingdom; Centre on Economics, Finance and Regulation (BAFFI), Milan 20136, Italy; Innocenzo Gasparini Institute for Economic Research (IGIER), Milan 20136, Milan)

Abstract

This paper investigates whether banks’ information technology (IT) can substitute for local branch presence in the provision of small business credit. Our identification strategy relies on loan-level data and the unique institutional features of the Italian public guarantee scheme during COVID-19. Despite the availability of online applications and low screening incentives, small business lending remains local even for first-time borrowers. However, IT partly mitigates the impact of local branch presence: banks with better IT provide more, cheaper, and faster guaranteed loans and lend more in areas where they have no bank branches, especially to first-time borrowers.

Suggested Citation

  • Fabrizio Core & Filippo De Marco, 2024. "Information Technology and Credit: Evidence from Public Guarantees," Management Science, INFORMS, vol. 70(9), pages 6202-6219, September.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:9:p:6202-6219
    DOI: 10.1287/mnsc.2023.4957
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