42 Pages Posted: 18 Apr 2013 Last revised: 17 Aug 2013
Date Written: August 2013
Using exogenous deposit windfalls from oil and natural gas shale discoveries, we demonstrate that bank branch networks help integrate U.S. lending markets. We find that banks exposed to shale booms increase their mortgage lending in non-boom counties by 0.93% per 1% increase in deposits. This effect is present only in markets where banks have branches and is strongest for mortgages that are hard to securitize. Our findings suggest that contracting frictions limit the ability of arm’s length finance to integrate credit markets fully. Branch networks continue to play an important role in financial integration, despite the development of securitization markets.
Keywords: Financial Integration, Branch Banking, Securitization
JEL Classification: G20, G21
Suggested Citation: Suggested Citation
Gilje, Erik and Loutskina, Elena and Strahan, Philip E., Exporting Liquidity: Branch Banking and Financial Integration (August 2013). Darden Business School Working Paper No. 2252920. Available at SSRN: https://ssrn.com/abstract=2252920 or http://dx.doi.org/10.2139/ssrn.2252920
By Erik Gilje