What drives banks' geographic expansion? The role of locally non-diversifiable risk

Arbeitspapier

We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the United States during the 1990s and 2000s. Further, our evidence shows that these banks take into account the local risks in potential target regions: they expand more into counties where risks are relatively high and positively correlated with risks in their home region. This suggests that these banks do not only diversify but also build on their expertise in local risks when they expand into new regions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 246

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation
• Subject: banking ; geographic expansion ; deregulation ; locally non-diversifiable risk ; catastrophic risk

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gropp, Reint E. ; Noth, Felix ; Schüwer, Ulrich
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
• (where): Frankfurt a. M.
• (when): 2019

Further information

• DOI: doi:10.2139/ssrn.3347766
• Handle: http://hdl.handle.net/10419/203322
• Last update: 10.03.2025, 11:46 AM CET