Reports
Discussion Papers
No.1011 Distance to Banks and SME Exit: Evidence of Threshold Effects in an Urban Gulf Economy
by Jun Saito
May 2026
ABSTRACT
This study examines how bank access is associated with SME exit, using firm-level data on café businesses in Kuwait. Focusing on distance to the nearest bank branch as a spatial indicator of financial access, the paper tests whether its effect on firm exit is linear or concentrated beyond a threshold. Logit estimates show that exit probability rises significantly beyond 1 km, especially in the 1–2 km range. Similar patterns are observed when bank density is used as an alternative measure of financial access. Although exploratory and descriptive, the findings suggest that spatial differences in access to banking services are associated with SME exit and highlight the importance of the spatial distribution of financial services in Gulf urban economies.
Keywords: SME finance; Bank access; Firm exit; Urban economics; Spatial finance; Gulf cities; Kuwait
JEL classification: G21, L26, R12, R32, O53
PDF available at https://hdl.handle.net/2344/0002001948
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