Using exogenous deposit windfalls from oil and natural gas shale discoveries, we demonstrate that bank branch networks help integrate U.S. lending markets. We find that banks exposed to shale booms increase their mortgage lending in non-boom counties by 0.93% per 1% increase in deposits. This effect is present only in markets where banks have branches and is strongest for mortgages that are hard to securitize. Our findings suggest that contracting frictions limit the ability of arm's length finance to integrate credit markets fully. Branch networks continue to play an important role in financial integration, despite the development of securitization markets. *We thank seminar participants at

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I use recent oil and natural gas shale discoveries in the U.S. as a natural experiment to identify the importance of local access to finance for local economic outcomes. Development of shale resources has led to large unexpected personal wealth windfalls, which increase local bank deposits. Higher bank deposits improve a bank's ability to make loans, leading to a positive local credit supply shock. I find that the number of establishments in shale boom counties in industries more dependent on external finance increases 4.7% relative to those less dependent on external finance. Furthermore, the benefit to industries with high dependence on external finance is greater in counties with a higher market share of small banks. These findings suggest that despite deregulation, consolidation, and improved use of information technology in the U.S. banking system, local credit supply and local banking market composition still matter for economic outcomes.

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