Abstract
This dissertation contains three essays in banking. The first essay estimates the elasticity of minority credit supply to deposit shares of Minority Depository Institutions (MDIs). I use within-county tract-level variation in exposure to the Community Reinvestment Act and show that if a census tract loses MDI presence following a merger between an MDI bank and a community bank, its minority mortgage credit declines by 37% and for up to six years. A 1% increase in county market shares of such tracts leads to a 3% decrease in county-level minority homeownership. Tracts that physically lose an MDI branch experience higher decline as compared to tracts where branch ownership changes. The second essay examines the impact of the Community Reinvestment Act (CRA) on societal welfare. For forty years, CRA has encouraged U.S. banks to lend to lower-income neighborhoods. Regarding costs, to comply with CRA, banks substitute away from small-business lending to higher income groups and face higher default rates on loans made. Regarding benefits, a large number of Americans have been lifted out of poverty through the CRA small-business lending channe.The final essay examines the role of commercial loan securitizers on small business lending. After the great recession, the commercial loan securitizers expanded their small business lending about four times faster compared to other banks. This sustained credit expansion had a positive impact on socioeconomic outcomes in geographies that were relatively more exposed to these banks. I document that for every percentage point increase in securitizers’ share of county-level deposits, the growth rate of small businesses and employment provided by these businesses increases by 4 bps and 6 bps respectively. Finally, I document that most of these benefits accrue to the non-tradable sector of the local economies.