Occasional short pieces explaining my research for a general audience.
Why Size Matters: Lending Growth Rates in the US Banking Sector
May 2023
The failure of Silicon Valley Bank put bank size back at the centre of the policy conversation. Economists usually study bank size in the context of crises — but size matters for credit supply even when the economy is not experiencing financial turmoil.
Two pieces of evidence make the point. First, research by Peter Paz shows that larger banks reduce lending by more than smaller banks after interest-rate increases. Second, in my own work on banking heterogeneity, I find that small banks are more likely to experience a contraction in their credit supply, while medium and large banks tend to experience positive average lending growth.
Using Call Report data for US commercial banks between 2009 and 2019, the patterns differ sharply across the size distribution — and they differ again between the mortgage and business credit channels. The implication is that aggregate credit numbers hide as much as they reveal: who is lending matters for what credit does to the economy.
For the full analysis, see the published version of the underlying research: Banking Heterogeneity, Credit Supply and Economic Growth (International Review of Economics and Finance, 2026; SSRN preprint).