The paper by Degryse and Ongena (2003) examines the impact of geographical distance on loan conditions between small firms and banks, focusing on the role of competition from other banks. The authors use a dataset of over 15,000 bank loans to small firms in Belgium, controlling for various factors such as relationship, loan contract, bank branch, firm, and regional characteristics. They find that loan rates decrease with the distance between the firm and the lending bank, and increase with the distance to competing banks. This suggests spatial price discrimination, where lenders charge higher rates to borrowers closer to competing banks. The effect is statistically significant and economically relevant, robust to changes in model specifications. The authors conclude that transportation costs, rather than informational asymmetries, are the primary driver of this spatial price discrimination. The study contributes to the literature on price discrimination and spatial pricing in financial markets, providing empirical evidence on the economic relevance of spatial price discrimination in bank lending.The paper by Degryse and Ongena (2003) examines the impact of geographical distance on loan conditions between small firms and banks, focusing on the role of competition from other banks. The authors use a dataset of over 15,000 bank loans to small firms in Belgium, controlling for various factors such as relationship, loan contract, bank branch, firm, and regional characteristics. They find that loan rates decrease with the distance between the firm and the lending bank, and increase with the distance to competing banks. This suggests spatial price discrimination, where lenders charge higher rates to borrowers closer to competing banks. The effect is statistically significant and economically relevant, robust to changes in model specifications. The authors conclude that transportation costs, rather than informational asymmetries, are the primary driver of this spatial price discrimination. The study contributes to the literature on price discrimination and spatial pricing in financial markets, providing empirical evidence on the economic relevance of spatial price discrimination in bank lending.