Research Papers, Authors and Key Findings
Research Paper Session 1
Credit Unions and the Value of the Tax Subsidy
The Transmission of Corporate Tax Cuts to Consumer Loans: Evidence from the TCJA
Author: João Granja, The University of Chicago
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Cross-Charter Consolidation: Evidence from Credit Union Acquisitions of Community Banks
Author: David Huberdeau Reid, The University of Memphis
Key Findings: The authors analyze mergers in which credit unions acquire community banks and compare them to traditional bank acquisitions of community banks. They find that credit unions acquire community banks with relatively higher commercial lending exposure and weak deposit franchise value. Overall, the findings suggest that credit union acquisitions reflect a systematic target-selection process shaped by geographic fit, balance-sheet composition, and the relative weakness of target banks’ deposit franchise value.
Does the Credit Union Tax Exemption Affect Competition in Local Lending Markets? Evidence from the TCJA
Author: Tanya Paul , University of California, Berkeley
Key Findings: The authors examine the extent to which the credit union tax exemption distorts competition in local mortgage markets. The Tax Cuts and Jobs Act (TCJA) of 2017 narrowed credit unions’ tax advantage relative to C-corporation banks and the authors find that these banks subsequently lowered mortgage rates while credit unions in counties with greater C-corporation bank presence increased mortgage originations and reduced average loan sizes. The response is concentrated in counties where “open charter” credit unions have meaningful market presence and is absent in narrow-charter counties, consistent with competitive flexibility driving the effect.
Research Paper Session 2
The Geography of Banking
Credit Without Proximity: Informational Frictions and Unequal Gains from Technology
Author: Quinn Maingi, University of Southern California
Key Findings: The authors examine how changes in technology, which have enabled loan officers to originate loans at a distance, have impacted physical and informational efficiency in the mortgage market. They show that, while there is an increase in physical efficiency, this comes at a significant informational cost, as banks take advantage of the opportunity to hire workers in lower wage areas. This generates an externality on would-be, otherwise creditworthy borrowers, who end up rationed in equilibrium. Local lending officers can strongly mitigate these effects but increases in efficiency of distant officers can worsen these effects.
Going the Distance? Bank-customer proximity, applicant demographics, and credit access
Author: Leo Pugachev, University of Missouri
Key Findings: Using novel mobile device-location data, the authors analyze how geographic proximity affects mortgage access. Their tests show that proximity significantly increases approval probabilities, and this effect is twice as large for minority applicants. The benefits of proximity are concentrated among riskier borrowers, nonstandard loans, and large banks, consistent with a soft-informational channel. As branch networks contract, their results highlight a social cost of reduced proximity in mortgage markets.
Geographically Concentrated Banks and the Amplification of Regional Economic Shocks
Author: SungJe Byun, Federal Reserve Bank of Dallas
Key Findings: When an economic shock hits a local economy, is it better served by large banks that are diversified through their national footprint or by smaller banks that are hit hard but are committed to serving that specific region? The authors examine whether banks amplify or absorb regional economic shocks by analyzing the effects of the 2014-2016 oil price collapse. Their findings demonstrate that banking system structure critically determines regional economic resilience: Geographic concentration creates correlated losses, forcing lending reductions in distressed regions and generating destabilizing feedback loops that transform temporary shocks into persistent damage.
Research Paper Session 3
The Competitive Edge of Community Banks
The Economic Payoff of Civic Engagement Evidence from Community Banks
Author: Alvaro Taboada, Mississippi State University
Key Findings: The authors assess the prevalence and impact of community banks’ civic engagement and examine its consequences for bank stability, lending, and local economic outcomes. They find that engaged banks subsequently exhibit lower deposit withdrawals, superior asset quality and greater small business lending. These advantages intensify when trust or information frictions are high, such as during banking crises and natural disasters. Their results suggest that civic engagement provides an advantage banks actively produce rather than passively inherit, rooted in social embeddedness, not brand awareness.
Banking Local: Media Slant, Erosion of Trust and Financial Decisions
Author: Elizabeth Berger, University of Houston
Key Findings: The authors study the effect of media slant on household banking decisions. They show that replacing one media outlet with another — a potentially minor change in a local media market — can have an economically significant impact on household banking. In response to the expansion of a local TV news station operator with a slant toward national events that are negative in nature, local depositors shift deposits from national banks to local banks and borrowers — especially low-income borrowers — shift their borrowing activity. Their evidence suggests that an erosion in trust drives these results.
Smaller Banks, Smarter Lending? Evidence from the Commercial Real Estate Market
Author: Alexei Tchistyi, Cornell University
Key Findings: The authors study the role of community banks in commercial real estate (CRE) lending during the COVID-19 pandemic, a period of heightened uncertainty in a market characterized by informational frictions. They show that community banks increased CRE lending during the pandemic, primarily within their local markets, and in large part by financing properties previously funded by large banks. Community banks also experienced lower foreclosure rates on loans issued during this period and stronger operating performance on properties tied to these loans. The findings are consistent with a banking competition model in which community banks can leverage superior local information against the lower costs of capital of large banks when uncertainty is high.