Research Papers (2026)
Failure in the Margins: Local Exposure to Non-local Bank Distress
Estimates of the effect of US bank failures on their home counties are mixed, although exposure peaks there and reverse causality should make any effect easier to find, not harder. Two properties of branch networks generate offsetting biases of known sign: networks are contiguous, so omitting neighbours’ exposure inflates the direct coefficient by two-fifths and discards a larger indirect effect, while plausibly exogenous failures are roughly twice as damaging as the locally concentrated failures that dominate exposure. Instrumenting on failures at banks holding at most 5 per cent of their footprint locally, own exposure at its median non-zero value lowers annual income growth by 0.22 percentage points, and neighbour exposure by a further 0.10.
JEL: E44, G21, G28
Keywords: Bank Failures, Credit Disruptions, Branch Networks, Regional Economic Growth, Financial Stability
Stress Tests on Main Street: Tracing Holding-Company Exposure through Branch Networks
Do bank stress tests reduce growth? They do not: counties most exposed to the 2011 introduction of the Comprehensive Capital Analysis and Review carry no income penalty relative to the least exposed, and losses of the size the credit-supply critique implies are ruled out. Exposure traces holding-company treatment through subsidiaries to the branch deposits each bank holds in a county, fixed at 2010 so it cannot respond to the policy. The holding company deleverages while the commercial bank holds its size and rotates out of lending into liquid assets, and aggregate county mortgage lending is unchanged.
JEL: G21, G28
Keywords: Stress Testing, Capital Regulation, Credit Supply, Macroprudential Policy
Consolidation-Driven De-Branching: Evidence from Failed-Bank Resolutions
Three forces drive bank de-branching — technology, fragility and consolidation — and because all three act at once, each is hidden. This paper isolates consolidation in 1,261 FDIC resolutions that sold a failed bank whole to one acquirer: bids are sealed and the branches reopen within days, and comparing counties within a deal differences out technology and fragility. In the 146 deals that carry the contrast, first-year branch growth where both banks operated runs 9.1 log points below the counties the acquirer entered for the first time, a four-year loss of about 4.6 branches per county.
JEL: G21, G28, G33, G34
Keywords: Branch Networks, Bank Mergers, Bank Branch Closures, Bank Consolidation