Bank mergers bring down the neighborhood

A new study published in The Journal of Finance finds that neighborhoods affected by bank consolidation are subject to higher interest rates in the future, diminished local construction, lower real estate prices, and an influx of poorer households. The lack of competitiveness in the local loan markets results in lower commercial real estate investment and a drop in real estate prices. This causes unemployment to rise alongside an influx of lower-income households. Consequently, there is an increase in property crime within the affected neighborhoods.