More Banks, Less Crime? The Real and Social Effects of Bank Competition
Mark J. Garmaise
University of California, Los Angeles (UCLA) - Anderson School of Management
Tobias J. Moskowitz
University of Chicago - Booth School of Business
AFA 2005 Philadelphia Meetings Paper
We examine the link between the competitiveness of the local banking market, urban development, and crime. We provide micro-level evidence that neighborhoods that experienced more bank mergers are subjected to future reduced loan provision, diminished local construction, lower prices and rents, an influx of poorer households, and higher crime in subsequent years. A one standard deviation increase in bank concentration raises homicide and burglary rates by approximately 1 percent. 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: 42working papers series
Date posted: January 13, 2005
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