Nationwide Branch Banking and the Presence of Large Banks in Rural Areas

Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks

“…According to Gilbert (2000), larger banks tend to have their offices in metropolitan statistical areas (MSAs), while smaller banks tend to have their offices in rural areas. Hence, we expect that an applicant located in an MSA 12 It should be noted, however, that only with the easing of restrictions on branching in the 1980s and 1990s could larger banks establish or buy branches in many areas-often those where smaller banks were predominant-that were previously off limits.…”

Bank efficiency: The role of bank strategy and local market conditions

“…Interestingly, there is some evidence that such factors may be of significant importance. Gilbert (2000), for example, analyzes the impact of nationwide branch banking in the U.S. on the local market conditions (mainly market structure) in rural markets. He concludes that although large, nationwide banks have not become the dominant banks in rural markets, "for small, locally owned banks in rural areas, low population density is not an effective barrier to the entry by large banking organizations" (p. 26).…”

Have community banks reduced home foreclosure rates?

“…White areas represent counties with less than 0.04 foreclosures. 11 Other possible instruments include population density and a location dummy for states that permit interstate banking by 1980 as possible determinant of community banking development, because density and the interstate (de)regulation determine whether large banks decide to enter a market previously dominated by community banking (Gilbert, 2000). These variables satisfy the relevance condition for valid instruments by correlating with community bank presence significantly, but fail the orthogonality condition by also correlating with county foreclosure rates directly.…”

“…Gilbert (2000) shows that states that allowed intra-state branching early (before 1980) have rural counties where large banking organizations are the dominant deposit holders. In contrast, states that deregulated later have rural counties where community banks are more dominant.…”