Peer effect, bank concentration, and crises: Evidence from the United States

Abstract

This research analyzes the impact of banks' peer effect in lending on the bank concentration‐crisis nexus for the period 2015–2021 in the United States. The analysis finds that a high level of bank concentration increases a crisis via the channel of banks' peer effect in lending, to which the imitative behavior of big banks is deemed to be the cause of deteriorating the damage of bank concentration on the stability of the banking sector. The results propose policy implications and what banks should do when treating financial market sustainability as their duty on the environmental, social, and governance (ESG) issues.