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. Fast internet is used to acquire additional information on borrowers after loan origination, improving monitoring. This, in turn, drives credit expansion through increased branch efficiency, broader geographical reach, and reduced local market concentration.