Discussant, Giorgio Calcagnini Università di Urbino “Carlo Bo” An Empirical Examination of the Growth in Out-of-Market Commercial Lending: The Changing Competitive Landscape and the Role of Asymmetric Information, by Kenneth P. Brevoort Discussant, Giorgio Calcagnini Università di Urbino “Carlo Bo” Ancona Ancona, September 22-23, 2006

Aim of the paper: to test the “tyranny of distance” hyphotesis It examines the growth of out-of-market lenders and the geographic pattern of their lending activities Results: there has been a substantial increase in the amount of out-of-market lending (due to changes at larger lenders); “tyranny of distance” declines over time at lenders that specialize in very small loans (≤$10,000), but overall the importance of proximity may have increased Ancona, September 22-23, 2006

Efficiency in credit scoring Main explanation Efficiency in credit scoring Ancona, September 22-23, 2006

Or is distance important when we look at small-sized loans? Questions/Comments Is phisical distance a good proxy of asymmetric information? And eventually, is this relationship linear? Or is distance important when we look at small-sized loans? Or which is the nature of small-sized loans? How are they provided? (credit cards? Internet?) Results on changes (1998-2003) concerning the average distance of out-of-market loans are mixed Control for the opening of new firms’ branches where out-of-market lenders are located Ancona, September 22-23, 2006

Author concludes that: “… the increase in out-of market lending activity has been limited to larger banks and smaller loans. … this change in lending patterns … is consistent with a credit scoring explanation.” Question: Are credit scores also available to small banks? May it be the case that larger banks have more efficient lending technologies than smaller banks? How bad loans performed after the increase in out-of market lending activity ? Ancona, September 22-23, 2006