Bank Mergers and Crime: The Real and Social Effects of Credit Market Competition
Mark J. Garmaise
University of California, Los Angeles (UCLA) - Anderson School of Management
Tobias J. Moskowitz
University of Chicago - Booth School of Business; AQR Capital; National Bureau of Economic Research (NBER)
NBER Working Paper No. w11006
Using a unique sample of commercial loans and mergers between large banks, we provide microlevel (within-county) evidence linking credit conditions to economic development and find a spillover effect on crime. Neighborhoods that experienced more bank mergers are subjected to higher interest rates, diminished local construction, lower prices, an influx of poorer households, and higher property crime in subsequent years. The elasticity of property crime with respect to merger-induced banking concentration is 0.18. We show that these results are not likely due to reverse causation, and confirm the central findings using state branching deregulation to instrument for bank competition.
Number of Pages in PDF File: 48
Date posted: January 25, 2005
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