Banking

This version: May 2007 Bank Geographic Diversification and predisposition of Lending to Monetary Shocks Micro-Evidence from U.S. County-Banking States Rocco R. Huang* ABSTRACT This paper provides empirical separate backup the view that bank geographic diversification reduces the sensitivity of withdraw supply to financial shocks, and hence, the efficacy of the bank bring canalise of monetary policy transmission. The study covers 18 U.S. county-banking states, where banks cannot localize up branches outside their home counties, but some banks whitethorn do good from geographic diversification through their holding company parents. ii types of banks coexist in local anesthetic(a) markets: local banks and diversified banks (i.e., local subsidiaries of multi-county holding companies). Bank-level add selective information (19771986) reveal that the diversified banks lending proves significantly smaller procyclicality across the course of a monetary cycle, even aft er arrogant for differences in size, liquidity, capitalization ratio and potential for securitization. The study gain shows that diversified banks (need to) build up smaller liquidity buffers than do local banks during monetary alter, which may explain why their lending is little sensitive to repressive monetary shocks.

The local temperament of lending in county-banking states allows us to control for local opinion involve based on the prediction of the interest-rate channel that counties with high manufacturing employment share should exhibit more procyclical demand for credit. It is as well shown that in these counties during monetary tightening t! he disadvantage of local banks is less evident, because the depressed credit demand may reduce the relevance of supply-side constraints. * The University of Amsterdam. E-mail: rocco.huang@gmail.com. I am especially grateful to Stijn Claessens for his comminuted comments and advice. I would also interchangeable to thank Marco Arena, Mitchell Berlin, Nicola Cetorelli, Vidhi Chhaochharia, Jonathan...If you want to sign on a full essay, army it on our website: OrderCustomPaper.com

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