Positive Bank-to-Bank Spillovers

Shasta Shakya

Journal of Financial and Quantitative Analysis, 2023, vol. 58, issue 5, 2228-2261

Abstract: This paper provides the first evidence of positive bank-to-bank spillovers. I show that geographic linkages between banks that engage in home lending in the same geographic region transmit positive shocks from one bank to another. I exploit shocks to the deposit base of banks located in counties experiencing shale oil booms and show that a nonshocked bank in a nonboom county expands lending more if its linkages have greater exposure to shale booms. Results show that the shock exposure of linkages has a positive impact on home prices of nonboom counties, and nonshocked banks located therein respond with increased lending.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jfinqa:v:58:y:2023:i:5:p:2228-2261_12

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