Commercial lending distance and historically underserved areas

Robert DeYoung, W. Scott Frame, Dennis Glennon, Daniel P. McMillen, Peter Nigro

Research output: Contribution to journalArticlepeer-review


We document a substantial and accelerating increase in the distance between small business borrowers and their lenders during the 1990s, based on a large random sample of U.S. Small Business Administration loans. Importantly, this increase was disproportionately large for borrowers located in low-income and minority neighborhoods. These phenomena are coincident in time with the adoption of credit scoring models, and we find indirect evidence consistent with this link. Our results suggest that automated lending processes have facilitated lender entry into local markets and have, at the margin, increased small business credit access in historically underserved markets.

Original languageEnglish (US)
Pages (from-to)149-164
Number of pages16
JournalJournal of Economics and Business
Issue number1-2
StatePublished - 2008


  • Borrower-lender distance
  • Credit scoring
  • Low income borrowers
  • Small business loans

ASJC Scopus subject areas

  • General Business, Management and Accounting
  • Economics and Econometrics


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