...top of page

Working paper 639

Victor Aguirregabiria, Robert Clark, Hui Wang, "The Geographic Flow of Bank Funding and Access to Credit: Branch Networks, Local Synergies, and Competition", 2019-05-16
Main Text (application/pdf) (1,274,445 bytes)

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: Geographic flow of credit; Access to credit; Bank oligopoly competition; Branch networks; Economies of scope between deposits and loans

JEL Classification: L13; L51; G21