When the Going Gets Tough, the Tough Get Expanding? A Study of the Effects of Violent Crime on Bank Founding, Branching, and Performance



We investigate how violent crimes affect bank founding, branching, and performance. We argue that local crimes may lead to acquisitions of local banks by non-local ones, consolidation of the industry, and fewer community banks, which, in turn, incentivize the formation of new banks. Local crimes during the founding period imprint banks with a routine that prioritizes non-local expansion over local expansion. Moreover, banks' local expansion benefits their performance, while non-local expansion harms it. Using a regional-level sample and a bank-level sample that covers 9,686 U.S. banks founded between 1966 and 2021 in 3,342 zip-code-defined locations, we find supportive evidence for our hypotheses. Our research contributes to imprinting theory by highlighting the pre-history of organizations and endogeneity in choosing imprints. We also contribute to a better understanding of how crimes may affect business organizations. Our study may shed light on policy and practice.


Christopher Marquis is Sinyi Professor of Chinese Management at the University of Cambridge Judge Business School. His research and teaching focus on how businesses are creating a more resilient and sustainable capitalism by focusing on the elusive triple bottom line of environmental, social and financial performance. He is the author of more than 20 peer-reviewed academic articles and more than 50 Harvard business cases on topics related to social innovation, sustainable business and doing business in China. Professor Marquis served two terms as an Associate Editor at Administrative Science Quarterly, and has also been a Senior Editor at Organization Science and Management and Organization Review.