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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Population Aging and Bank Risk-Taking |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published electronically before print/final form (Epub ahead of print) |
| Language |
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| Journal Title | Journal of Financial and Quantitative Analysis |
| Publisher | Cambridge University Press |
| Geographical Reach | international |
| ISSN | 0022-1090 |
| Page Range | 1 - 25 |
| Date | 2023 |
| Abstract Text | What are the implications of an aging population for financial stability? To examine this question, we exploit geographic variation in aging across U.S. counties. We establish that banks with higher exposure to aging counties increase loan-to-income ratios. Laxer lending standards lead to higher nonperforming loans during downturns, suggesting higher credit risk. Inspecting the mechanism shows that aging drives risk-taking through two contemporaneous channels: deposit inflows due to seniors’ propensity to save in deposits; and depressed local investment opportunities due to seniors’ lower credit demand. Banks thus look for riskier clients, especially in counties where they operate no branches. |
| Free access at | DOI |
| Digital Object Identifier | 10.1017/s0022109023001011 |
| Other Identification Number | merlin-id:24203 |
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