Does the geographic expansion of banks reduce risk?

• 成果类型: Article
• 署名作者: Goetz, Martin R.; Laeven, Luc; Levine, Ross
• 署名单位: Goethe University Frankfurt; Tilburg University; Centre for Economic Policy Research - UK; European Central Bank; University of California System; University of California Berkeley; National Bureau of Economic Research
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.01.020
• 发表日期: 2016
• 页码: 346-362
• 关键词: Banking; Bank regulation; Financial stability; RISK; hedging

摘要

We develop a new identification strategy to evaluate the impact of the geographic expansion of a bank holding company (BHC) across US metropolitan statistical areas (MSAs) on BHC risk. For the average BHC, the instrumental variable results suggest that geographic expansion materially reduces risk. Geographic diversification does not affect loan quality. The results are consistent with arguments that geographic expansion lowers risk by reducing exposure to idiosyncratic local risks and inconsistent with arguments that expansion, on net, increases risk by reducing the ability of BHCs to monitor loans and manage risks. (C) 2016 Elsevier B.V. All rights reserved.