Discussion paper
DP19033 When Broadband Comes to Banks: Credit Supply, Market Structure, and Information Acquisition
This paper studies how broadband internet affects bank credit supply to non-financial firms. We rely on loan-level data from the Italian Credit Register and quasi-experimental variation in the diffusion of broadband. Our estimates include firm-time fixed effects to control for the effect of broadband on firm demand. We find that branches in municipalities reached by fast internet increase loan supply and reduce interest rates. The credit expansion results from higher branch productivity, wider geographical reach, and lower local market concentration. Branches connected to fast internet acquire more information on borrowers after loan origination, which is used to improve monitoring.
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