Human Mobility, Relationship Banking, and Bank Performance: Evidence from the Pandemic
40 Pages Posted: 13 Sep 2022 Last revised: 13 Sep 2022
Date Written: October 16, 2020
Abstract
The current pandemic has been a human mobility shock to economic activity. Using the geographic locations of bank branches, we calculate a bank's exposure to mobility declines and evaluate its impact on performance. We find that U.S. banks' stability, profitability, and asset quality are distorted by their exposure to mobility declines. There is also a statistically significant increase in non-performing consumer loans, residential, and commercial mortgages, while no impact on commercial loans. Our findings also demonstrate that relationship banking has been an insulating factor for banks against the negative impacts of mobility reductions.
Keywords: COVID-19, mobility, bank stability, non-performing loans, relationship banking
JEL Classification: G21, I18
Suggested Citation: Suggested Citation