Rawley Z. Heimer
Menu

Research › Local banking and access to finance

Local banking and access to finance

How access to local banks and credit markets shapes the financial lives of households and small businesses over the long run.

This research shows that people who grow up in places with less-developed local banking enter credit markets later and, as adults, have lower credit scores and more delinquent accounts, with effects that fade only slowly after they move away; that stronger local credit markets, driven by more predictable contract enforcement, raise small-business and household credit and incomes; and that banks cut lending to protected communities when they expect political relief from fair-lending enforcement. The studies exploit plausibly exogenous variation in local financial development, including differences created by federal law across Native American reservations.

Related terms: local banking, bank branches, branch networks, banking deserts, access to finance, financial inclusion, unbanked and underbanked households, local financial development, credit market development, small business lending, community banks, bank lending, early-life exposure to banks, trust in banks, financial literacy, Community Reinvestment Act.

Published papers

  1. Growing Up Without Finance

    With James R. Brown and J. Anthony Cookson

    Journal of Financial Economics

    People who grow up with less access to local banks enter credit markets later and, as adults, have lower credit scores and more delinquent accounts.

  2. Law and Finance Matter: Lessons from Externally Imposed Courts

    With James R. Brown and J. Anthony Cookson

    Review of Financial Studies

    More predictable contract enforcement produces stronger local credit markets for small businesses and households, and higher incomes.

  3. Politicizing Consumer Credit

    With Pat Akey and Stefan Lewellen

    Journal of Financial Economics

    Expected political interference weakens regulation: when a state’s senator becomes a powerful committee chair, credit to the state’s minority neighborhoods falls by 7.5%, driven by banks headquartered in the state.

  4. Courting Economic Development

    With James R. Brown and J. Anthony Cookson

    World Bank Economic Review

    Uncertain court enforcement holds back long-run development: similar reservations under state courts grew faster than those under tribal courts.

Other research topics