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

69 Pages Posted: 15 Jan 2019 Last revised: 21 Feb 2019

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina

Felix Irresberger

University of Leeds - Leeds University Business School (LUBS)

Raluca A. Roman

Federal Reserve Bank of Philadelphia

Date Written: 2019-01-14

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 to 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 the 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 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 the University of Michigan Surveys of Consumers (2019-01-14). FRB of Philadelphia Working Paper No. 19-4. Available at SSRN: https://ssrn.com/abstract=3315938 or http://dx.doi.org/10.21799/frbp.wp.2019.04

Allen N. Berger (Contact Author)

University of South Carolina

701 Main Street
Columbia, SC 29208
United States

Felix Irresberger

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

Leeds LS2 9JT
United Kingdom

Raluca A. Roman

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
17
Abstract Views
95
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information