Working Papers

Hasan, I., Krause, T., Manfredonia, S., and Noth, F. (2022). Banking market deregulation and mortality inequality (No. 14/2022). Bank of Finland Research Discussion Papers. Submitted: Journal of Financial and Quantitative Analysis

Abstract: This paper shows that local banking market conditions affect mortality rates in the United States. Exploiting the staggered relaxation of branching restrictions in the 1990s across states, we find that banking deregulation decreases local mortality rates. This effect is driven by a decrease in the mortality rate of black residents, implying a decrease in the black-white mortality gap. We further analyze the role of mortgage markets as a transmitter between banking deregulation and mortality and show that households’ easier access to finance explains mortality dynamics. We do not find any evidence that our results can be explained by improved labor outcomes.

Müller, I., Noth, F., and Tonzer, L. (2022). A note on the use of syndicated loan data (No. 17/2022). IWH Discussion Papers.

Abstract: Syndicated loan data provided by DealScan has become an essential input in banking research over recent years. This data is rich enough to answer urging questions on bank lending, e.g., in the presence of financial shocks or climate change. However, many data options raise the question of how to choose the estimation sample. We employ a standard regression framework analyzing bank lending during the financial crisis to study how conventional but varying usages of DealScan affect the estimates. The key finding is that the direction of coefficients remains relatively robust. However, statistical significance seems to depend on the data and sampling choice.

Hasan, I., Manfredonia, S., and Noth, F. (2020). Cultural resilience and economic recovery: Evidence from Hurricane Katrina (No. 16/2020). IWH Discussion Papers. Revise and resubmit: The Economic Journal.

Abstract: This paper investigates the critical role of culture for economic recovery after natural disasters. Using Hurricane Katrina as our laboratory, we find a significant adverse treatment effect for plant-level productivity. However, local religious adherence and larger shares of ancestors with disaster experiences mutually mitigate this detrimental effect from the disaster. Religious adherence further dampens anxiety after Hurricane Katrina, which potentially spur economic recovery. We also detect this effect on the aggregate county level. More religious counties recover faster in terms of population, new establishments, and GDP.

Hasan, I., Kiesel, K., and Noth, F. (2019). "And forgive US our debts": Do Christian moralities influence over-indebtedness of individuals? (No. 8/2019). IWH Discussion Papers. Revise and resubmit: Journal of Empirical Finance.

Abstract: This paper analyses whether Christian moralities and rules formed differently by Catholics and Protestants impact the likelihood of households to become overindebted. We find that over-indebtedness is lower in regions in which Catholics outweigh Protestants, indicating that Catholics' forgiveness culture and a stricter enforcement of rules by Protestants serve as explanations for our results. Our results provide evidence that religion affects the financial situations of individuals and show that even 500 years after the split between Catholics and Protestants, the differences in the mind-sets of both denominations play an important role for situations of severe financial conditions.

Koetter, M., Müller, C., Noth, F., and Fritz, B. May the force be with you: Do political consolidation barriers depress bank profitability? Revise and resubmit: Journal of Money, Credit and Banking.

Abstract: We test whether the removal of implicit political consolidation barriers causally enhances bank profitability. We exploit an exogenous shock through which selected regional banks in Germany are forced to merge: the unification of counties. County mergers legally force government-owned, but not privately owned banks to merge. Forced bank mergers cause profitability to hike relative to voluntary mergers while bank risk responds only mildly. Corporate borrowers exposed to forced bank mergers borrow more at lower cost, increase investment, and exhibit higher employment. The removal of implicit bank consolidation barriers thus seems to spark profit dynamics and enhance corporate performance, too.

Gropp, R. E., Noth, F., and Schüwer, U. (2019). What Drives Banks' Geographic Expansion? The Role of Locally Non-Diversifiable Risk (No. 6/2019). IWH Discussion Papers.

Abstract: We show that banks that are facing relatively high locally non-diversifiable risks in their home region expand more across states than banks that do not face such risks following branching deregulation in the 1990s and 2000s. These banks with high locally non-diversifiable risks also benefit relatively more from deregulation in terms of higher bank stability. Further, these banks expand more into counties where risks are relatively high and positively correlated with risks in their home region, suggesting that they do not only diversify but also build on their expertise in local risks when they expand into new regions.

Bremus, F., Krause, T., and Noth, F. (2017). Bank-specific shocks and house price growth in the US (No. 3/2017). IWH Discussion Papers: Submitted: Journal of Political Economy Macroeconomics

Abstract: This paper investigates the link between mortgage supply shocks at the bank level and regional house price growth in the U.S. using micro-level data on mortgage markets from the Home Mortgage Disclosure Act for the 1990-2014 period. Our results suggest that bank-specific mortgage supply shocks indeed affect house price growth at the regional level. The larger the idiosyncratic shocks to newly issued mortgages, the stronger is house price growth. We show that the positive link between idiosyncratic mortgage shocks and regional house price growth is very robust and economically meaningful, however not very persistent since it fades out after two years.