Banks are multi-market firms. Branch networks channel shocks into the economy, and because branches are slow to open and close, these frictions transmit shocks independently of bank characteristics, creating geographic variation. My work exploits that geographic and organisational structure for identification.
My job market paper, Failure in the Margins, asks what a bank failure does to the counties the failed bank served. Bank branch locations are not random: networks are assembled out of neighbouring markets, so one bank failure exposes a block of adjacent counties simultaneously. Estimates that omit exposure to neighbouring markets overstate the direct effect of a bank failure by two-fifths, and understate the total effect in crisis periods, when failures are less isolated and adjacent counties receive direct and indirect treatment at once.
Stress Tests on Main Street examines whether bank stress testing reduces income growth. It traces a national treatment rule based on bank size through branch networks to the counties those banks serve, and asks whether the more exposed counties grew more slowly. They did not: while credit from treated banks slowed, aggregate credit at county level held steady.
Consolidation-Driven De-Branching exploits FDIC resolution auctions, where a failed bank passes whole to one sealed bidder within days, to separate consolidation from technology and fragility. Where the acquirer already operated, the network sheds nine-tenths of the branches the failed bank brought; where it was new to the county, it keeps them. Which counties keep their branches is settled at the bid deadline, by an overlap the FDIC observes and its least-cost test does not price.
I am currently developing a gravity model of bank lending with Steven Ongena (University of Zurich),
built on branch networks, to estimate the decay rate of credit, how that decay differs across banks
and their lending technologies, and how evenly credit is distributed across the markets a bank serves. A second strand will examine how
technology is changing banking and the role of branch networks within it.
