UC Berkeley

This dissertation examines how commercial banks and voluntary associations affect employment in residential communities. The first chapter investigates how the presence of certain types of banks affects employment in residential communities. By providing financial resources to businesses, banks are spurring entrepreneurship and creating jobs. But locally-owned and absentee-owned banks differ in both their lending practices and their dependence on the communities where they operate. Moreover, the effect of banks on community employment is contingent what kinds of businesses exist in those communities. Empirical analysis of every community in the contiguous United States from 1994 to 2007 show that locally-owned banks that have at least one branch in another community contribute the most to local employment growth, while the contribution of absentee-owned banks to employment growth depends on the number of businesses with high levels of tangible assets relative to total assets, and the contribution of locally-owned banks that have all their branches in the focal community to employment growth varies with the number of businesses with low levels of tangible assets relative to total assets. Robustness checks validate these findings.

The second chapter investigates how different types of voluntary associations affect the ability of communities to spur the creation of new organizations and to support existing businesses. Voluntary associations allow people with common interests to come together in a non-competitive environment. But voluntary associations vary in the extent to which they facilitate demographic diversity in their members' social networks and the degree to which their members participate in association activities. Empirical analysis of every community in the contiguous United States from 1994 to 2007 show that professional, political and social advocacy associations contribute to increases in the number of establishments, while business, civic and social, and religious associations, and labor unions either decrease or do not affect the number of establishments in communities. The same pattern of results was found when examining the affect of voluntary associations on foundings of locally-owned banks that have all their branches in the focal community. Moreover, in support of the vital role played by these banks, results show that increased presence of these banks results accentuates the effect of voluntary associations that increase the number of establishments in communities and attenuates the effect of voluntary associations that decrease or have no affect on the number of establishments in communities. Robustness checks validate these findings.