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UID:de7d1a10b9030f548d79bf41fff06f37
CATEGORIES:Seminars
CREATED:20240708T130742
SUMMARY:Esteban Rossi-Hansberg - University of Chicago
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:\n\nBanks in Space\n\n\nAbstract:\nWe study the spatial expansion of banks 
 in response to banking deregulation in the 1980s and 90s. During this perio
 d, large banks expanded rapidly, mostly by adding new branches in new locat
 ions, while many small banks exited. We document that large banks sorted in
 to the densest markets, but that sorting weakened over time as large banks 
 expanded to more marginal markets in search of locations with a relative ab
 undance of retail deposits. This allowed large banks to reduce their depend
 ence on expensive wholesale funding and grow further. To rationalize these 
 patterns we propose a theory of multi-branch banks that sort into heterogen
 eous locations. Our theory yields two forms of sorting. First, span-ofcont
 rol sorting incentivizes top firms to select the largest markets and smalle
 r banks the more marginal ones. Second, mismatch sorting incentivizes banks
  to locate in more marginal locations, where deposits are abundant relative
  to loan demand, to better align their deposits and loans and minimize whol
 esale funding. Together, these two forms of sorting account well for the so
 rting patterns we document in the data.\n
DTSTAMP:20260422T231056Z
DTSTART:20241028T163000Z
DTEND:20241028T180000Z
SEQUENCE:0
TRANSP:OPAQUE
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