More Banks, Less Crime? The Real and Social Effects of Bank Competition

42 Pages Posted: 13 Jan 2005  

Mark J. Garmaise

University of California, Los Angeles (UCLA) - Anderson School of Management

Tobias J. Moskowitz

Yale University, Yale SOM; AQR Capital; National Bureau of Economic Research (NBER)

Abstract

We examine the link between the competitiveness of the local banking market, urban development, and crime. We provide micro-level evidence that neighborhoods that experienced more bank mergers are subjected to future reduced loan provision, diminished local construction, lower prices and rents, an influx of poorer households, and higher crime in subsequent years. A one standard deviation increase in bank concentration raises homicide and burglary rates by approximately 1 percent. We show that these results are not likely due to reverse causation, and confirm the central findings using state branching deregulation to instrument for bank competition.

Suggested Citation

Garmaise, Mark J. and Moskowitz, Tobias J., More Banks, Less Crime? The Real and Social Effects of Bank Competition. AFA 2005 Philadelphia Meetings Paper. Available at SSRN: https://ssrn.com/abstract=647841 or http://dx.doi.org/10.2139/ssrn.647841

Mark J. Garmaise (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Tobias J. Moskowitz

Yale University, Yale SOM ( email )

New Haven, CT 06520
United States

HOME PAGE: http://som.yale.edu/tobias-j-moskowitz

AQR Capital ( email )

Greenwich, CT
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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