Under Review (2026)
Failure in the Margins: Local Exposure to Non-local Bank Distress
This paper reframes regional bank-failure analysis around branch networks. I map U.S. bank failures to counties through pre-failure branch footprints, showing that the relevant treatment is not “a failure in the county” but joint exposure across connected local economies. Using a nested peripheral-exposure instrument that exploits within-bank footprint heterogeneity, IV estimates show that a one-percentage-point increase in failed deposits relative to county income reduces annual personal income growth by 0.14 percentage points. The cumulative response implies that personal income remains approximately 1–2 per cent below its pre-failure path four years after exposure and returns only gradually over the subsequent decade. Adjustment is uneven across income components: public transfers rise and remain elevated, while asset-related income declines sharply with little recovery, consistent with sustained deterioration in market income only partly offset by public insurance mechanisms.
Stress Tests on Main Street: Tracing Holding-Company Exposure Through Branch Networks
A central critique of post-crisis stress-testing regimes is the “growth penalty” hypothesis: by tightening effective capital constraints, stress tests may reduce credit supply and depress economic growth. I evaluate this claim using the introduction of the U.S. Comprehensive Capital Analysis and Review (CCAR). I trace eligibility from holding companies to counties through predetermined ownership links and persistent branch deposit networks, constructing county-level exposure with pre-period deposit shares. Local-projection estimates show that median exposure (21% of county deposits) raises real personal income by 1.52 percentage points cumulatively over four years. The response is concentrated in proprietors’ and capital-type income rather than labour earnings or transfers. Complementary Call Report evidence indicates increased capitalisation and reduced reliance on wholesale funding without an average contraction in loan intensity.
Consolidation-Driven De-Branching: Overlap Effects in Quasi-Exogenous Bank M&A
This paper isolates a consolidation channel of de-branching using FDIC Purchase-and-Assumption resolutions, in which failed banks are allocated to acquirers through regulator-driven, least-cost auctions completed under tight time constraints. Because individual failures are largely unanticipated and resolutions occur rapidly, acquirers inherit branch networks with limited scope for pre-positioning. Using a stacked event-study design that exploits within-deal cross-county variation, I compare branch outcomes in overlap counties (served by both acquirer and target pre-resolution) with expansion counties (served only by the target). Overlap counties experience significant branch contraction relative to expansion counties, indicating that consolidation generates discrete, geographically concentrated reductions in local branch capacity—even when technology, demand conditions, and acquirer characteristics are held fixed within transactions. The results highlight a trade-off embedded in modern resolution regimes: mechanisms that stabilise the financial system may simultaneously compress the geographic footprint of local banking.