Lin Abstract: This paper studies the role of information costs in banks’ geographic expansion. Due to information asymmetries, borrower-lender relationships tend to be local and persistent over time. This paper shows that these relationships also persist across space. I investigate the expansion of US banks following the interstate banking deregulation starting in early 1980s. Using data on firms’ establishment locations, I find that, when banks cross state borders, they tend to enter areas where “familiar” firms — firms that are operating in banks’ home territory — are located. I also show, using loan level data, that these multi-state firms do access banking credit, and moreover they borrow from neighbouring banks. The fact that information costs limit where banks go and who they serve leads to differential growth effects of banking deregulation across regions and firms
Jenuwine Abstract: This paper examines invoicing currency choice across the distribution of exporting firms. Using comprehensive data on French exporters, we find that larger exporters are more likely to use multiple currencies in invoicing and respond more readily to motives for currency choice. To interpret this evidence, we build a quantitative model of currency choice with fixed costs. We estimate the model with moment inequality techniques and find positive fixed costs associated with invoicing in dollars. We plan to undertake counterfactuals about the incidence of exchange rate shocks across the distribution of firms with and without fixed costs.