 It’s a wonderful loan: local financial composition, community banks, and economic resilienceLuke Petach, Stephan Weiler and Tessa Conroy Journal of Banking & Finance, 2021, vol. 126, issue C Abstract: Using data on the composition of the banking sector for U.S. counties, we explore two channels through which banking composition may impact county-level development outcomes: a direct channel through employer establishments, and an indirect channel through a county’s resilience to macroeconomic shocks. An increase in community bank presence has a direct effect on rural and micropolitan counties via faster employment growth, but no statistically significant direct impact on establishment births. However, we show community banks had a significant impact on regional economic resilience during the Great Recession. Counties with greater pre-recession community bank presence experienced smaller declines in employment growth and establishment births during the recession—an effect that is most pronounced for small establishments in rural counties. In contrast, home prices were substantially more resilient in metropolitan areas that had concentrations of local capital in the form of community banks. Keywords: Community banking; Economic resilience; Regional economic development; Information asymmetries (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:126:y:2021:i:c:s0378426621000352 DOI: 10.1016/j.jbankfin.2021.106077 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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