Bank Size and Household Financial Sentiment - Surprising Evidence from University of Michigan Surveys of Consumers

57 Pages Posted: 24 Jun 2018 Last revised: 5 Dec 2018

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Felix Irresberger

University of Leeds - Leeds University Business School (LUBS)

Raluca A. Roman

Federal Reserve Bank of Philadelphia

Date Written: August 30, 2018

Abstract

We analyze comparative advantages/disadvantages of small and large banks in improving household sentiment regarding financial conditions. We match sentiment data from the University of Michigan Surveys of Consumers with local banking market data from 2000-2014. Surprisingly, the evidence suggests that large rather than small banks have significant comparative advantages in boosting household sentiment. Findings are robust to instrumental variables and other econometric methods. Additional analyses are consistent with both scale economies and superior safety of large banks as channels behind the main findings. These channels appear to more than offset stronger relationships with and greater trust in small banks.

Keywords: Households, Financial Constraints, Financial Sentiment, Small Banks, Large Banks, Banking Market Structure

JEL Classification: G21, G28, G34

Suggested Citation

Berger, Allen N. and Irresberger, Felix and Roman, Raluca A., Bank Size and Household Financial Sentiment - Surprising Evidence from University of Michigan Surveys of Consumers (August 30, 2018). Leeds University Business School Working Paper No. 18-13. Available at SSRN: https://ssrn.com/abstract=3192185 or http://dx.doi.org/10.2139/ssrn.3192185

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Felix Irresberger

University of Leeds - Leeds University Business School (LUBS) ( email )

Leeds LS2 9JT
United Kingdom

Raluca A. Roman (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
354
PlumX Metrics