Community Banking Research Conference Names Winner of the John W. Ryan Award for Most Significant Contribution to Community Banking Research

ST. LOUIS - The Community Banking Research Conference research committee has named the “Bank Loan Markups and Adverse Selection (PDF)” paper as the winner of the 2022 John W. Ryan Award for Most Significant Contribution to Community Banking Research. The announcement came Thursday as part of this year’s Community Banking Research Conference.

The authors of the winning paper are:

• Mehdi Beyhaghi, Federal Reserve Bank of Richmond
• Cesare Fracassi, University of Texas at Austin
• Gregory Weitzner, McGill University

The Community Banking Research Conference is co-sponsored by the Federal Reserve System, the Conference of State Bank Supervisors (CSBS) and the Federal Deposit Insurance Corp. The 10th annual conference was held in-person and virtually at the Federal Reserve Bank of St. Louis on Sept. 28-29, 2022.

Here’s a summary of their paper, according to the 2022 conference volume (PDF): “The authors analyze market power in local U.S. corporate loan markets. They find that, in contrast to typical theories of competition, loan markups are higher in regions in which more banks operate. They provide evidence that this result is driven by asymmetric information across banks, which becomes exacerbated as the number of banks increases. They also provide causal support for the role of adverse selection by showing that markups drop following a shock to large banks’ lending capacities, which reduces asymmetric information in local lending markets. Their findings suggest that adverse selection is an important driver of market power in local bank markets and has implications for antitrust policy.”

This year, the award was renamed in honor of one of the conference founders, John Ryan, the former CSBS president and CEO who died earlier this year.

You can read the full paper (PDF) and see a list of past award winners on communitybanking.org.