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

  • 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 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.

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Author:Reint GroppGND, Felix Noth, Ulrich Schüwer
URN:urn:nbn:de:hebis:30:3-492407
URL:https://ssrn.com/abstract=3347766
Parent Title (English):SAFE working paper series ; No. 246
Series (Serial Number):SAFE working paper series (246)
Publisher:SAFE
Place of publication:Frankfurt am Main
Document Type:Working Paper
Language:English
Year of Completion:2019
Year of first Publication:2019
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2019/03/12
Tag:banking; catastrophic risk; deregulation; geographic expansion; locally non-diversifiable risk
Issue:March 6, 2019
Page Number:61
HeBIS-PPN:447165410
Institutes:Wirtschaftswissenschaften / Wirtschaftswissenschaften
Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF)
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License LogoDeutsches Urheberrecht