Banking Deserts, Branch Closings, and Soft Information

Donald Morgan, Maxim Pinkovskiy and Bryan Yang

No 20160307, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: U.S. banks have shuttered nearly 5,000 branches since the financial crisis, raising concerns that more low-income and minority neighborhoods may be devolving into ?banking deserts? with inadequate, or no, mainstream financial services. We investigate this issue and also ask whether such neighborhoods are particularly exposed to branch closings?a development that, according to recent research, could reduce credit access, even with other branches present, by destroying ?soft? information about borrowers that influences lenders? credit decisions. Our findings are mixed, suggesting that further study of these concerns is warranted.

Keywords: crisis; Soft information; banks; branches; deserts (search for similar items in EconPapers)
JEL-codes: D1 G2 (search for similar items in EconPapers)
Date: 2016-03-07
New Economics Papers: this item is included in nep-ure
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