Lost diversity : business lending in the centralised banking system of the UK

Based on the classification of decentralised and centralised banking, this paper investigates diversity in business lending in the UK. Using expert interviews and desk research, the distance between lenders and SMEs in credit decisions for the identified types of lenders is classified. Due to the early disappearance of regional and dual bottom-line banks, today hardly any short-distance lender remains in the UK. Three different approaches have been identified to re-introduce decentralised lending to the island, though running regional banks is challenging in times of low interest rates and tightened bank regulation.