Local Concentration in the Small Business Lending Market and Its Relationship to the Deposit Market

This note analyzes competition and concentration in the small business lending market using data obtained from Community Reinvestment Act (CRA) disclosures and data on local branches from the Federal Deposit Insurance Corporation's (FDIC) Summary of Deposits (SOD). In 1963, the Supreme Court defined the product market for commercial banking.

Is Lending Distance Really Changing? Distance Dynamics and Loan Composition in Small Business Lending

Has information technology improved small businesses' access to credit by hardening the information used in loan underwriting and reducing the importance of proximity to lenders? Previous research, pointing to increasing average lending distances, suggests that it has. But this conclusion can obscure differences across loans and lenders. Using over 20 years of Community Reinvestment Act data on small business lending, we find that while average distances have increased substantially, distances at individual banks remain unchanged. Instead, average distance has increased because a small group of lenders specializing in high-volume, small-loan lending nationwide have increased their share of small business lending by 10 percentage points. Our findings imply that small businesses continue to depend on local banks.

Capitalism Doesn’t Bend

This chapter explores how communities advocate for themselves in the midst of large bank mergers, focusing on the KeyBank–First Niagara merger that was completed in 2016 with a $16.5 billion benefits agreement. The concomitant rise of bank mergers and benefits agreements demonstrates how communities are increasingly voicing their opinions and trying to secure economic investments. However, much like the system of securitization, benefits agreements bundle the rights of future revenues into short-term deals that are sold to communities for banks’ and their shareholders’ long-term profits. Benefits agreements can exploit marginalized communities to proffer evidence of the banks’ compliance with the Community Reinvestment Act in exchange for only minimal economic investments.