Spillovers from entry: the impact of bank branch network expansion

摘要

I study why local banking markets became dominated by multimarket firms following deregulation in the 1990s. I estimate a model of branch entry that allows for spillovers across markets. The spillovers complicate estimation, and so I develop a revealed preference approach that also deals with unobserved firm and market heterogeneity. I then analyze the impact of multimarket banks and find that they increase local competition, but that they also open more branches than single-market firms, and subsequently offer lower deposit rates. Ultimately, their welfare impact differs across markets based on the availability of outside alternatives and consumer sensitivity to rates.