Presenter: Emanuela Benincasa, University of Zurich

Title: The Social Effects of Bank Deserts

Abstract: This paper investigates whether bank branch presence affects firm misconduct. Exploiting ZIP code-level variations from staggered branch closures across the USA, I find that firms in bank deserts—neighborhoods without bank branches—are more likely to violate environmental and social laws than those in never-deserted neighborhoods. Misconduct is more pronounced in environmental offenses, suggesting firms target regulations with lower legal liabilities. Higher misconduct seems driven by reduced morally induced costs for misbehaving, as offenses increase in bank deserts without prior branch fraud or scams. Overall, findings indicate that the absence of bank branches deteriorates firms’ practices in local communities.

Host: Thomas Kokholm