The Geographic Flow of Bank Funding and Access to Credit: Branch Networks, Local Synergies, and Competition

57 Pages Posted: 22 May 2019

See all articles by Victor Aguirregabiria

Victor Aguirregabiria

University of Toronto - Department of Economics

Robert Clark

Queen's University

Hui Wang

Peking University - Guanghua School of Management

Date Written: May 2019

Abstract

Geographic dispersion of depositors, borrowers, and banks may prevent funding from flowing to areas of high loan demand, limiting credit access. We provide evidence of geographic imbalance of deposits and loans, and develop a methodology for investigating the contribution to this imbalance of (i) branch networks, (ii) market power, and (iii) scope economies, using US bank-county-year level data. Results are based on a novel measure of deposits and loans imbalance, and estimation of a structural model of bank competition that admits interconnections across locations and between deposit and loan markets, thereby permitting counterfactuals highlighting the role of the three factors.

Keywords: Access to credit, Bank Competition, Branch networks, Economies of scope between deposits and loans, Geographic flow of bank funds

JEL Classification: G21, L13, L51

Suggested Citation

Aguirregabiria, Victor and Clark, Robert and Wang, Hui, The Geographic Flow of Bank Funding and Access to Credit: Branch Networks, Local Synergies, and Competition (May 2019). CEPR Discussion Paper No. DP13741. Available at SSRN: https://ssrn.com/abstract=3391088

Victor Aguirregabiria (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
4169784358 (Phone)

HOME PAGE: http://individual.utoronto.ca/vaguirre/

Robert Clark

Queen's University ( email )

Kingston, Ontario K7L 3N6
Canada

Hui Wang

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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