Article | Journal of Financial Economics | July 2007

Geographical Segmentation of U.S. Capital Markets


Demographic variation in savings behavior can be exploited to provide evidence on segmentation in US bank loan markets. Cities with a large fraction of seniors have higher volumes of bank deposits. Since many banks rely heavily on deposit financing, this affects local loan supply and economic activity. I show a positive effect of local deposit supply on local outcomes, including the number of firms, the number of manufacturing firms, and the number of new firms started. The effect is stronger in industries that are heavily dependent on external finance. The deregulation of intrastate branching reduced the effect of local deposit supply by approximately a third.

Keywords: Age; Economy; Capital Markets; Banks and Banking; Financing and Loans; Local Range; United States;


Becker, Bo. "Geographical Segmentation of U.S. Capital Markets." Journal of Financial Economics 85, no. 1 (July 2007): 151–178.