Small business lending and the bank-branch network

I examine the role of bank’s distance to borrower and proximity other lenders for transmission financial shocks across bank network. use a novel dataset small business lending based on information from Community Reinvestment Act, which measures at census tract groups within each county yields rich variation in bank–borrower borrower–competitor distance. document that banks with increased liquidity local oil booms, originate more loans firms far these above-average geographic exposure residential booms reduce stable house prices. Bank–borrower is important credit expansions, closer receiving credit, but not contractions. Proximity competitors plays key role: consistent theoretical predictions, both expansions contractions disproportionately affect markets where faces higher competition.