When Broadband Comes to Banks : Credit Supply, Market Structure, and Information Acquisition

This paper studies the effects of bank branches’ access to broadband internet on credit to non-financial firms. We rely on granular microdata from the Italian Credit Register and quasi-experimental variation associated with the pre-existent telephone infrastructure to address the endogenous diffusion of broadband. We find that branches in municipalities reached by fast internet increase loan supply, both at the extensive and intensive margin, and reduce interest rates. The credit expansion goes through higher branch productivity, wider geographical reach, and lower local market concentration. Broadband induces banks to acquire more information after loan origination, which is used to improve monitoring