This paper studies the impact of local unemployment shocks on bank profitability. Our work advances on previous studies that use national- or state-level data, as we create a bank-specific measure of local unemployment in which the bank has exposure. Using this novel measure, we determine how shocks to unemployment affect each individual bank's profitability. Our results indicate that an increase in the local market unemployment rate decreases bank profitability on average by 3.2%. The impact of local market conditions on profitability is stronger for banks that are large, operate in more markets, face more competition, and have a greater reliance on lending. We further examine what components of bank profitability are most impacted by local labor market conditions and find that net interest income is most impacted.

中文翻译：

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当地劳动力市场状况会影响银行盈利能力吗？

本文研究了当地失业冲击对银行盈利能力的影响。我们的工作在先前使用国家或州级数据的研究上取得了进展，因为我们创建了银行有风险敞口的银行特定的当地失业指标。使用这种新颖的衡量标准，我们确定失业冲击如何影响每家银行的盈利能力。我们的结果表明，当地市场失业率的上升会使银行的盈利能力平均下降 3.2%。对于规模较大、在更多市场开展业务、面临更多竞争以及对贷款依赖程度更高的银行，当地市场状况对盈利能力的影响更大。我们进一步研究了银行盈利能力的哪些组成部分受当地劳动力市场状况的影响最大，并发现净利息收入的影响最大。