Human Mobility, Relationship Banking, and Bank Performance: Evidence from the Pandemic

The current pandemic has been a human mobility shock to economic activity. Using the geographic locations of bank branches, we calculate a bank's exposure to mobility declines and evaluate its impact on performance. We find that U.S. banks' stability, profitability, and asset quality are distorted by their exposure to mobility declines. There is also a statistically significant increase in non-performing consumer loans, residential, and commercial mortgages, while no impact on commercial loans. Our findings also demonstrate that relationship banking has been an insulating factor for banks against the negative impacts of mobility reductions.