| My dissertation is concerned with branch networks of depository institutions.; The first chapter considers the question of how the level of deposits obtained by one bank branch depends on the geography of other branches in the network. I present a spatial model of consumer choice of depository institution in which there is a positive relation between the level of deposits per branch and the proximity of other branches. I call this effect a branch network benefit. To test this model empirically I estimate it within a discrete choice framework using data on six states. Using the estimated model I perform a counterfactual experiment of changing the geography of branches by increasing the expected distances that consumers need to travel to reach them. The biggest impact occurred for Iowa, where the predicted deposits per branch would fall on average by 8%. The moderate results occurred for Nebraska with the average fall of 5.3% and the smallest impact occurred for North Dakota, South Dakota, Montana and Wyoming with the average decrease of merely 0.4%.; The second chapter considers the compliance of depository institutions with the Community Reinvestment Act. Its purpose is to encourage depository institutions to help meet the credit needs of the communities in which they operate. Banks that get low scores on three tests (lending, investment, and service) can be denied the possibilities of opening new branches, merging with other institutions or entering new lines of business. In particular the service test is supposed to measure the availability of banks' offices in the low-income neighborhoods. In this chapter I construct a measure of access to branch networks for consumers that incorporates the distances that they need to travel to reach the branches. With this measure I assess the aggregate compliance of banks with the CRA service test. In Iowa and Wyoming it seems that the richer consumers actually have to travel longer distances. However, for Nebraska, North Dakota, South Dakota and Montana the results are reversed, whereby both Dakotas seem to have the weakest compliance. However there is no strong correlation between this measure and the per capita income. |
