This thesis consists of three essays on banking in the U.S. The first two chapters study how supervisors and regulators influence bank behavior. The third chapter explores how bank CEOs allocate credit. The first chapter uses a quasi-natural experiment, the closure of regulatory offices, to identify the effects of supervision on bank behavior. Under the decentralized structure of U.S. bank supervision, banks in the same geographic area may be supervised by different regulatory offices. The chapter shows that, following the closure of a regulatory office, banks previously supervised by that office increase their solvency risk and lending compared with banks in the same counties that are supervised by a different regulatory office. Further, these banks exhibit lower risk-adjusted returns, lower asset quality, and opportunistic provisioning behavior for loan losses. Information asymmetry between banks and supervisors partly explains the results. The second chapter documents that nearly 30% of U.S. banks employ at least one board member who currently or previously served on a regulator’s advisory council or on the board of a regulator as a form of public service. The chapter shows that connections to regulators undermine regulatory discipline by decreasing the sensitivity of bank risk to capital. Connected banks are able to extract larger public subsidies than non-connected banks by shifting risk to the financial safety-net, resulting in wealth transfers from taxpayers to shareholders of risk-shifting connected banks. One potential reason for these effects is that connected banks receive preferential treatment in supervision from regulators. The third chapter uses the birthplace of U.S. bank CEOs to investigate the effect of hometown favoritism on bank business policies. Exploiting within-bank variation in distances to a CEO’s hometown, the chapter shows that banks make more mortgage and small business lending as well as branch expansions in counties that are proximate to the hometown of the CEO. This is due to the CEO’s altruistic attachment to her hometown; the effects are stronger during economic downturns, among altruistic CEOs, in poorer counties and marginal mortgage applicants. Further, hometown favoritism does not lead to worst bank performance. However, it is associated with positive economic outcomes in counties exposed to greater favoritism.

Notre étude a été inspirée par l’observation que malgré les efforts considérables en matière de la libéralisation financière au Malawi à partir de la fin des années 1980, les résultats apparents étaient plutôt médiocres, notamment en ce qui concerne la persistance de marges d’intermédiation (spreads) élevés. L’objectif central de notre travail est d’essayer d’élucider pourquoi. Notre hypothèse centrale est que si l’on ne tient pas compte du comportement des banques en matière de leurs réactions vis-à-vis de leurs incitations et leurs contraintes dans la mise en place de la politique de la libéralisation financière, on est voué à la déception en matière des résultats. L’étude montre que dans une situation économique caractérisée par une instabilité macroéconomique, les banques ont moins d’incitations à être plus efficientes du point de vue macroéconomique, c’est à dire en agissant dans la direction de l’approfondissement financier et de l’octroi de crédit au secteur privé. Bien au contraire, tout en agissant de manière rationnelle, elles sont tentées de rechercher des rentes faciles et sûres qui viennent du financement des déficits publics. Ceci leur permet d’accomplir deux objectifs : maximiser leur profit et minimiser leur risque-crédit, notamment en repoussant les « contraintes externes » imposées par les conditions économiques -notamment les taux d’escompte élevées- à leur clients à travers la combinaison d’une augmentation de taux d'intérêt sur les prêts et d’une faible augmentation des taux d'intérêt sur les dépôts. / This study was inspired by the observation that despite the considerable efforts in financialliberalization in Malawi from the late 1980s, the apparent results were mediocre, especially with regardto the persistence of high intermediation margins (spreads). The central objective of this study is to tryto investigate why. The key hypothesis is that if one does not take into account of bank behavior interms of how banks react vis-à-vis their incentives and constraints during the process of financialliberalization, the results are likely to be disappointing. The study shows that in an economic situationcharacterized by macroeconomic instability, banks have less incentive to be more efficient from amacroeconomic perspective, i.e., by enhancing financial deepening through higher credit to the privatesector. On the contrary, while acting rationally, they are tempted to look for easy and safe returnscoming from financing government deficits. This allows them to accomplish two objectives: maximizingprofit and minimizing credit risk, notably by pushing the "external constraints" imposed by economicconditions - including high rediscount rates- to their customers through a combination of an increasein interest rates on loans and a smaller increase in interest rates on deposits.Keywords: financial liberalization, bank behavior, intermediation margins, bank