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Applied Microeconomics and Trade Seminar Series Presents: Olivia Bordeu
January 15 @ 1:40 am
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Applied Microeconomics and Trade Seminar
Date: Thursday, January 15, 2026
Time: 1:40 – 3:00 p.m.
Location: E2-499
Speaker: Olivia Bordeu
Title: Assistant Professor of Economics
Affiliation: University of California, Berkeley
Host: Jeremy West
Seminar title: Bank Branches and the Allocation of Capital across Cities
ABSTRACT: We study how banking market structure and branch networks shape the spatial mobility of capital. Using administrative loan-level data from Chile, we show that bank-level deposit shocks lead receiving banks to increase lending and lower interest rates relative to other banks. Interest rate reductions are concentrated in cities where the bank has a small market share, consistent with local market power. We develop and estimate a quantitative spatial model with multi-city banks, oligopolistic local credit markets, and frictions in interbank lending. These channels lead to spatial dispersion in interest rates and the marginal productivity of physical capital, reducing GDP. Interbank frictions reduce steady-state GDP by 0.04%, while spatial variation in loan markups reduces GDP by 0.5%. Bank mergers improve financial integration between cities but reduce competition, generating heterogeneous welfare effects that depend on the merging banks’ geographic overlap.
