This version: May 2007 Bank Geographic Diversification and sensibility of Lending to Monetary Shocks Micro-Evidence from U.S. County-Banking States Rocco R. Huang* ABSTRACT This paper provides empirical secern backup the view that bank geographic diversification reduces the sensibility of bear 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 prune up branches outside their home counties, but some banks may do good from geographic diversification through their retentivity 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 entropy (19771986) reveal that the diversified banks lending proves significantly smaller procyclicality crosswise the course of a monetary cycle, even after overbearing for differ ences in size, liquidity, capitalization ratio and potential for securitization. The study that 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 slight sensitive to repressive monetary shocks.
The local reputation of lending in county-banking states allows us to control for local confidence involve based on the prediction of the interest-rate channel that counties with higher(prenominal) manufacturing employment share should exhibit more procyclical demand for credit. It is too shown that in these counties during monetary tightening the disadvantage of loc! al banks is less evident, because the depressed credit demand may reduce the relevancy of supply-side constraints. * The University of Amsterdam. E-mail: firstname.lastname@example.org. I am especially grateful to Stijn Claessens for his precise comments and advice. I would also interchangeable to thank Marco Arena, Mitchell Berlin, Nicola Cetorelli, Vidhi Chhaochharia, Jonathan...If you want to bum a full essay, army it on our website: OrderCustomPaper.com
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