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US National Banks and Local Economic Fragility

Author

Listed:
  • Giovanni Calice

    (Loughborough University)

  • Yong Kyu Gam

    (University College Dublin)

Abstract

We examine the relationship between US national banks’ local market shares and the economic fragility of the counties in which they operate. We find that counties with national banks that have large local market shares experience a greater fluctuation in their income growth in the subsequent year. Further, an increase in income growth is more pronounced during normal times but declines significantly in a distressed market. We further find that the national banks create greater liquidity during normal times and lower liquidity in distressed times. Overall, our results indicate that national banks may expose local economies to macro-level distress.

Suggested Citation

  • Giovanni Calice & Yong Kyu Gam, 2023. "US National Banks and Local Economic Fragility," Journal of Financial Services Research, Springer;Western Finance Association, vol. 63(3), pages 313-338, June.
    • Handle: RePEc:kap:jfsres:v:63:y:2023:i:3:d:10.1007_s10693-022-00382-3
    DOI: 10.1007/s10693-022-00382-3
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    More about this item

    Keywords

    National banks; Branch networks; Local economy; Economic growth;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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