Diversification of geographic risk in retail bank networks: evidence from bank expansion after the Riegle-Neal Act

• 成果类型: Article
• 署名作者: Aguirregabiria, Victor; Clark, Robert; Wang, Hui
• 署名单位: University of Toronto; Center for Economic & Policy Research (CEPR); Universite de Montreal; HEC Montreal; Peking University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12136
• 发表日期: 2016
• 页码: 529-572
• 关键词: MARKET-STRUCTURE; empirical-analysis; wal-mart; COMPETITION; entry; deregulation; integration; economies; distance; finance

摘要

The 1994 Riegle-Neal Act (RN) removed restrictions on branch-network expansion for banks in the United States. An important motivation was to facilitate geographic risk diversification (GRD). Using a factor model to measure banks' geographic risk, we show that RN expanded GRD possibilities in small states, but only some large banks took advantage. Using our measure of geographic risk and an empirical model of branch-network choice, we identify preferences toward GRD separately from other factors possibly limiting network expansion. Counterfactuals show that risk negatively affected bank value but was counterbalanced by economies of density/scale, reallocation/merging costs, and local market power concerns.