Abstract
Since 2010, the total number of commercial bank branches in the United States has decreased by about 20%. Do branch closures meaningfully affect economic activity? We investigate the impact of branch closures on small businesses, whose access to credit may be facilitated through local relationships with banks. Using exogenous variation in closures related to mergers and acquisitions, we show that the closure of nearby bank branches leads to decreased small business employment growth and entry while increasing business exit. Our results are robust to variations in our measure of employment, proximity, and construction of the instrument. We use subsample analyses to better understand how firm and market characteristics affect the role and importance of local branches for small businesses.
Disciplines
Banking and Finance Law | Labor and Employment Law | Law and Economics
Date of this Version
8-10-2025
Working Paper Citation
Ranish, Benjamin; Stella, Andrea; and Zhang, Jeffery Y., "Out of Sight, Out of Mind: Nearby Branch Closures and Small Business Growth" (2025). Law & Economics Working Papers. 299.
https://repository.law.umich.edu/law_econ_current/299
Included in
Banking and Finance Law Commons, Labor and Employment Law Commons, Law and Economics Commons