Cynthia Sin Tian Ho

How does the closure of bank branches affect existing and potential entrepreneurs?

Entrepreneurs commonly use bank loans to finance their companies due to their low interest rate and no dilution of ownership of the company.

However, the number of physical bank offices in Sweden halved from 1990 to 2015. An alarming announcement from Handelsbanken in 2020 says that they will close down almost half of their existing bank branches in Sweden. This means that the number of bank offices is going to decrease drastically in Sweden. This is an issue in the countryside where bank offices are already sparsely distributed.

Together with my research group, we looked at how the closure of bank offices affect new firm formation. We have data on new firm formation and its determinants at the municipal level from 2007 to 2013. As the number of bank offices decreases, the distance to the nearest bank offices becomes longer.

By using spatial econometric models, the results from the first paper show that an increase in the distance to the bank offices results in lower new firm formation. Proximity to bank offices is important as it helps to facilitate the transmission of information between the bank office manager and the firm.

My subsequent research looks at how the closure of the bank offices and entrepreneurial attitudes affect new firm formation in different industries. My upcoming research will focus on how the change in the proximity to bank offices affect the use of bank loans as a form of financing in SMEs.

Originally from Singapore, I studied my Bachelor with Honours in Business Analytics in the School of Computing, National University of Singapore. I have also previously worked for several startups in the areas of data analytics and machine learning.